Women are facing poverty in retirement as they cut back on pension contributions to fund childcare. A report released by The Fawcett Society, which campaigns for women’s rights, found many women are funding childcare out of their own pay packets (not their partners’) – which means stopping pension contributions.
It partly responsible for a doubling of the pay gap – currently close to 20 per cent according to the ONS – in retirement, when women tend to have pensions 40 per cent lower than men. That’s among the highest in Europe.
The findings were from a study of wealthier women, with salaries that would typically make pension saving affordable. They worked in sectors including finance, insurance and communications.
Tellingly, the women also expressed a kind of fatalism about their long-term economic prospects, a general bafflement with the system – “it’s just confusing to be honest,” said one respondent – and the feeling that their own needs “sort of end up bottom of the pile”.
Their attitudes to pensions are even more striking, the report states, “given that the women in the sample predominantly had a degree and a number were in senior professional roles”.
“There are enormous challenges for women when it comes to pensions,” says Baroness Altmann, pensions minister, commenting on the research. “It’s well documented that women save less than men and too many older women end up in poverty.”
She’s right. The problem’s been around for decades – even if most normal people are totally unaware.
It’s all down to our system, where “the concept of retirement from paid work barely applied to women who never retired from housework,” says author John Macnicol in his book Neoliberalising Old Age.
“Past models of retirement tended to be masculine... the gender-differentiated impact of retirement is only beginning to be explored.”
Indeed. The system was designed by men for men, and women are only now waking up to how hard retirement hits us. Females outnumber males in retirement by almost two to one, simply because we live longer. Of those living alone after 65, 70 per cent are female. And they have pensions far lower than males. It’s the “feminisation of poverty” – when we speak of poor elderly, we're actually talking about women.
Despite the introduction of auto-enrolment, which means 6m more people saving into pensions through the workplace, the government’s measures don’t go far enough. The new state pension, which came into effect on 6 April, has been criticised as 11m people in their 20s and 30s will lose close to £19,000 during retirement, according to the Pensions Policy Institute. The government says younger people will benefit from better workplace pensions – but if women cut their hours or take career breaks, they won’t.
The problem is the impetus shifting towards personal responsibility for supporting oneself in old age, at a time when financial pressures wrought by other social problems are building.
The housing crisis means saving for massive deposits after paying high rents. Student loans linger into one’s 40s. Childcare costs have risen to the point that many mothers hand nearly all their pay packet over to the minder. And the government beseeches us all to save more on top of that. For women, those problems are compounded by decades-old social structures: the pay gap, glass ceiling and responsibility for caring. Changing these is like turning around a super-tanker.
While the government blusters that women will get a better deal one day, and the pensions industry pinkwashes its leaflets, it seems the only way to tackle the dire lack of saving is to blast women with images of the true horror that awaits them in old age. The government won’t fix it, the industry can only try – it’s up to you.
Annabelle Williams is deputy money editor at City A.M.