Why pension gap between genders won’t close till 2040

WOMEN’S state pensions will not equal men’s until 2040, a Government Minister has admitted.

Work and Pensions Minister Baroness Stedman-Scott told the House of Lords the gender gap in state pensions was closing.

But she added that, despite efforts to improve things, women still ended up with lower pensions by retirement age because they took periods out of the workplace or worked fewer hours.

The pension is based on the number of years in which workers pay National Insurance.

The shortfall has been described as ‘unacceptable’ by campaigners, who warn that the gender pensions gap is even higher than the gender wage gap.

Women are more likely to spend time out of the workforce looking after children or caring for elderly parents. Those aged 65 to 69 in February 2016 received on average just 82 per cent of the state pension handed to men.

A revised pension has since been introduced that includes a credit-based system to account for time off work on maternity leave, those receiving child benefits or a carer’s allowance so that people could top up the state pension in years when they were unable to work.

But the Institute for Fiscal Studies think-tank said women in the 65-to-69 age band still received 8 per cent less than their male counterparts in 2020.

Jan Shortt, general secretary of the National Pensioners Convention (NPC), said women should not have to wait another 18 years for the gap to close.

She said waiting until it ‘evens itself out’ left women out of pocket, adding: ‘The gender pension gap is more than twice the gender pay gap, which in the 21st century in the sixth-richest country in the industrial world is unacceptable.

‘We see no firm resolve or strategy from the Government that gives us reason to believe there is a political will to deal with it.’

The NPC is calling for the state pension to be overhauled so that all pensioners receive 70 per cent of the national living wage.

Labour peer and accountancy professor Lord Sikka said women were treated as ‘second-class citizens’, adding: ‘There’s misery for millions.’

He claimed the Government could afford to increase women’s payments because there was a £42.5billion surplus in the National Insurance fund account from which the state pension is paid.

Lord Sikka said: ‘The Government can easily pay it. All they are doing is inflicting misery on women.’

The Department for Work and Pensions said: ‘The new state pension was introduced in 2016. Outcomes are expected to equalise for men and women by the early 2040s – over a decade earlier than they would have under the old system.’

Angela Madden, of Women Against State Pension Inequality, said: ‘Governments have mishandled reform of pensions to the particular disadvantage of women born in the 1950s.

‘This has put many women in an impossible financial position. The stories we hear from women are heart-rending.’

‘Put many women in an impossible position’