Is there a Pensions Gender Gap?

I read the Football365 web page every lunchtime and one of my favourite features is something called Mediawatch. It identifies and shares examples of shoddy sports journalism. Stories that are not really newsworthy, stories based on misquoting people, stories based on nothing more than the rantings of an individual Twitter member, that sort of thing.

But if there's one area that can compete with sports journalism, it's financial journalism. And when I saw in the news that the Pensions Policy Institute was claiming that a woman would need to start saving at age 3 to be able to retire on the same pension as a man, I just had to take a closer look. How can this even be possible?

Well, I did take a look and I now know that there are four underlying reasons. Let's take them in turn:

Career gaps, caring responsibilities

This explains most of the gap. If we leave out inflation and investment returns. a woman who takes 18 years off work to bring up kids would need to work another 18 years to earn the same over her career as a man. Not a surprise. But how does this work in reality?

Say there's this married couple. They have kids and she takes a career break to bring them up. Actually, this argument also applies if she's taking time off to care for elderly parents. While she's at home, the husband is still working to support his family and, yes, to build up a pension pot.

A few years later and he has a pot of X and she has a pot of Y. X is bigger than Y but does this lead to unfairness? Well:

• if they retire at this point, they have X+Y to spend on generating a retirement income, whether that's via annuities, drawdown or a combination. The income all goes into their joint account because they're a team. OK, so one of them contributed X and the other Y but who cares?
• if they get divorced at this point, a decent divorce solicitor won't tell him to keep his X and her to keep her Y and then share out the rest equally. They'll recognise that the X+Y of pension savings is an asset just like the house and everything else, to be shared equally.

Either way, the X+Y belongs to them both. The extra X-Y that he earned while he was the only one going out to work doesn't all belong to him, opening up a gender gap. It's jointly owned, 50:50.

There's no pensions gap here. There's a jointly held asset tat the father has contributed more to than the mother. If anything, the father could be the one complaining but that's just his side of a deal in which the mother has contributed more to the kids' upbringing.

Childcare costs

What about childcare costs then? Well, for an attached couple with a joint account, this is just a family expense, so no issues there. For a single mother needing to work, that's something for the Child Support Agency, not a pensions issue.

Life expectancy

The next reason is life expectancy. Women live longer than men and if they retire at the same age, getting to enjoy a longer retirement, but wanting the same income level, they'll need a bigger pension pot.

I really can't see the problem here. Isn't a longer life expectancy something to celebrate rather than something to complain about? I took actions 12-18 months ago to increase my life expectancy and I'm not complaining about how this means I can't draw down as much from my savings as I could have done.

The gender pay gap

And finally there's the gender pay gap. I can't argue with this. But it should be the subject of a story in its own right, not hidden inside an article on pensions that's full of weird arguments.

My conclusions at the end of this? The Pension Policy Institute seems to be trying to incite arguments out of thin air. Should women be angry about contributing less than 50% to their family's pensions? Should they be angry about having longer life expectancies than men? No. There's only one issue here. It's the gender pay gap and it has nothing to do with pensions.

Happy International Women's Day everyone!