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On this report, we doc variations in pension incomes and pension saving between women and men within the UK, and analyse the drivers behind these variations. Particularly, we look at two completely different ‘gender pension gaps’. First is the hole in common non-public and state pension incomes between women and men who’re already over state pension age. Second is the hole in common pension saving between working-age women and men, with a concentrate on how that is affected by variations in labour market experiences, and the way the gaps differ for personal sector workers, public sector workers and the self-employed.
Key findings
Gaps in incomes between women and men over state pension age
1. Males used to obtain considerably extra state pension revenue than girls, however that hole has nearly closed for folks reaching state pension age in recent times. Whereas girls born within the early Forties obtain round 25% much less in state pension revenue than males on common, this hole is under 5% for these born within the early Fifties.
2. Nevertheless, the hole in non-public pension revenue between women and men over state pension age is wider and has narrowed significantly much less. For instance, girls born within the late Nineteen Thirties had common gross non-public pension revenue nearly 60% decrease than males throughout their early 70s; an analogous hole existed between women and men born within the late Forties. There was a slight narrowing of the hole for these born within the early Fifties to round 45%, nevertheless.
Gaps in pension saving between working-age women and men
3. Specializing in 22- to 59-year-olds, we discover that 59% of ladies have been saving right into a pension in 2019, in contrast with 66% of males. This hole in pension participation is principally pushed by the truth that girls are much less doubtless than males to be in paid work: 77% of each female and male staff are saving in a pension.
4. On common, throughout all working-age folks, girls had common whole annual pension contributions of £2,600, in contrast with £3,400 for males. This distinction within the quantity getting into males’s and girls’s pension pots might be a direct determinant of variations in non-public pension incomes amongst future retirees. An important driver is variations in common earnings: averaged throughout all folks taking part in a pension scheme, girls really contribute the next proportion of their pay into their pension (15%) than males (13%).
5. The variations in sectoral composition between the female and male workforces work to extend girls’s pension contributions in contrast with males’s. In 2019, 32% of feminine staff and solely 17% of male staff labored within the public sector, the place pension participation is excessive and common contribution charges a lot bigger than within the non-public sector. As well as, solely 10% of feminine staff are self-employed, in contrast with 15% of male staff, and fewer than one in 5 self-employed staff are saving right into a pension.
Gaps in pension saving between female and male workers
6. Trying solely at workers, women and men have pretty comparable office pension participation charges, however this masks necessary variations between these working within the non-public sector and people working within the public sector. Within the non-public sector, girls have had persistently decrease office pension participation than males, though computerized enrolment has led to the hole narrowing barely in recent times from 7 share factors in 2012 to five share factors in 2020. Within the public sector, the hole in office pension participation has now disappeared, having been 4 share factors in 2012.
7. There are additionally variations in common pension contribution charges between women and men amongst these saving in a pension in the private and non-private sectors. Within the public sector, there’s a hole in common whole contribution charges in favour of males which initially widens with age, reaching 2.5% of pay by age 40, however which narrows after age 50. Variations are a lot smaller within the non-public sector, with girls having a barely increased common whole contribution charge as much as their mid 40s, and males having a barely increased charge thereafter.
8. Variations in pension participation charges and contribution charges (i.e. as a share of pay) between female and male workers are predominantly defined by variations in earnings between women and men which additionally widen with age. The £10,000 annual earnings threshold for computerized enrolment is especially necessary within the non-public sector as a result of extra girls work part-time and subsequently earn lower than this quantity: there may be primarily no hole in pension participation between female and male workers incomes over £10,000 per 12 months. Within the public sector, variations in contribution charges might be defined by variations in earnings and business, per pretty inflexible contribution buildings by earnings in public sector schemes.
Gaps in pension saving between female and male self-employed staff
9. The hole in pension participation charges between female and male self-employed staff has fallen significantly over time, from a niche of 21 share factors in 1998 to solely 6 share factors in 2020. This outcomes from the stark decline in pension participation for self-employed males (particularly within the early 2000s), which fell by 31 share factors from 54% in 1998 to 22% in 2020, in contrast with a fall of 17 share factors (33% to 16%) amongst self-employed girls.
10. Gaps in non-public pension participation and contributions between female and male self-employed staff are smaller as soon as variations in earnings are accounted for. However even after controlling for earnings, self-employed males usually tend to take part in a pension scheme than self-employed girls. Nevertheless, amongst these taking part in a pension, self-employed girls contribute as a lot as, or greater than, self-employed males who’ve comparable earnings.
Abstract and coverage implications
11. These findings present that there isn’t any one single pension saving gender hole, as the scale (or existence) of the hole is dependent upon whether or not we take into account all working-age people, or concentrate on several types of staff. Insurance policies aimed toward addressing the gender pension hole need to be clear on which hole goes to be focused. Certainly, variations attributable to labour market experiences could be higher addressed by insurance policies designed to have an effect on these labour market variations, somewhat than utilizing pension saving coverage. Nevertheless, as a result of non-public retirement incomes are more and more reliant on outlined contribution pensions that are decumulated by way of retirement, girls – who’ve decrease lifetime earnings on common and have longer retirements – are more likely to proceed to have decrease retirement incomes than males.
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