The long process towards equality in the UK pension system will reach a new landmark in November, when the age at which women can claim their state pension equalises with men’s at 65.
Since 2010, women’s pension age has been gradually rising from 60, where it has been set since the 1940s, to equalise with men.
But while gender parity may have been achieved on paper, retirement outcomes remain “shockingly” unequal.
New analysis of official data on UK household incomes suggests the gap between men and women’s pension income is nearly 40 per cent, or more than twice that of the gender pay gap.
The study, which examined the 2016-17 Department for Work and Pensions family resources survey, considered all retirement income sources, including state, personal and workplace pensions. It concluded that pension income for female retirees was 39.5 per cent lower than for men that year, or around £7,000.
“These figures reveal the shocking scale of the gender pension gap and clearly demonstrate the need for urgent action to address this issue,” said Sue Ferns, deputy general secretary of Prospect, the union, which undertook the analysis.
The research comes a quarter of a century after the then chancellor Ken Clarke announced in his 1993 Budget that the women’s pension age would be brought into line with men’s at 65 by 2020 — a deadline that was later brought forward to 2018.
How different working patterns are hitting women
At the time, the government argued that the female state pension age needed to rise, in part because women were increasingly playing a role equal to men in the economy and typically lived longer.
The Prospect analysis is the latest of a series of studies highlighting a continuing gulf in pension outcomes between men and women.
In 2017, Which?, the consumer group, found that on average women received £126.45 a week in state pension, a fifth less than the £153.99 average for male pensioners.
Last month, Zurich, a pension provider, said a study of its data found men’s “drawdown” pensions pots were on average about £212,000 — compared with £132,000 for women.
It also found that women were faring less well in the workplace, with men under the age of 35 on average receiving £217 more in employer pension contributions a year than women of the same age.
“Men and women cannot yet be considered equal in terms of pension outcomes,” said Malcolm McLean, senior consultant with Barnett Waddingham, the actuarial consultants.
“They have equal rights with men towards the state pension, although because of past history they have yet to achieve full parity in all respects.”
Maike Currie, investment director with Fidelity International, said different working patterns were the chief reason why women were retiring less comfortably than men.
“The gender pay gap means women have less to put into their pot, and subsequently get a smaller contribution match from their employer,” said Ms Currie.
She added that women were also “falling between the cracks” due to loopholes in the pension system that disadvantage those caring for children and other relatives — work still largely done by women.
Benefit changes creating further risk
In 2016, the Trades Union Congress estimated as many as 3m part-time female workers, including cleaners and carers, had missed being enrolled into a workplace pension by their employer because they did not meet minimum earnings criteria.
“The rules of the auto-enrolment system disadvantage women, because unless you’re earning more than £10,000 a year, you’re not auto-enrolled at all,” said Ros Altmann, a former pensions minister.
“Many women are doing part-time work, earning less than £10,000, and are missing out.”
Changes to child benefit in 2013 are also putting a generation of new mothers at risk of losing thousands of pounds in state pension, experts warn.
Any person who cares for a child under 12 who is not in paid employment, and therefore is not making national insurance contributions, is eligible for national insurance credits to help build their state pension record. Registering for child benefit means that these credits can be clocked up.
But the numbers of new mothers registering for the government payment has dropped significantly since means-testing of the benefit was introduced in 2013.
“Many women would never guess that by opting out of receiving child benefit they risk doing serious damage to their state pension provision,” said Helen Morrissey, of Royal London, the pension provider.
“Yet the most recent figures show that this is exactly what is happening.”
Prospect is urging the government to take practical steps to address the inequality in retirement outcomes by producing an annual report on the size of gender pensions gap and abolishing the earnings minimum for auto-enrolled workers.
The Department for Work and Pensions said its pension reforms were helping millions of women to a secure retirement, reducing the historic gender divide in pensions income.
In a statement it said: “Through automatic enrolment the number of women in the private sector without a workplace pension has fallen from three in five in 2012, to one in five in 2017.”
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