Why are women’s pensions smaller than men’s?

I have enjoyed International Woman’s day in Sri Lanka, but have been thinking about why we continue to make it so hard for woman in the UK to build up a meaningful pension pot.

Speaking as a man, I can see how pensions have been designed for my circumstances

  • I have not had career breaks
  • I have not worked part time while bringing up a family
  • I have not been the wrong side of the gender pay gap
  • I have a brilliant pension scheme in payment, the prospect of a state pension in ten years and substantial amount in retirement savings.
  • Add to this the unequal opportunities available to men and not to women in the financial services industry.
  • So I am on the right side of the asymmetry of pension  information that favours men.

All of these advantages are menwards, it is the role of Government to redistribute to citizens disadvantaged by systemic imbalances and not to exacerbate the imbalances by punishing the needy.

James Coney’s tweet explains that the state, through the net pay system of pension contribution is actually making things worse for women when it should be making it better.

This shameful state of affairs is easily understood. Despite our Prime Minister’s declaration that she would be on the side of those just getting by, she has run her Government on an agenda of austerity for those on the outside and prosperity for those within.

Nowhere is this more apparent than in welfare and no injustice so touches me as the injustice of being promised an incentive to save and not getting it. That is what is happening to the 1.2m people who are auto-enrolled on a promise of 3+4+1 and find that the +1 Government incentive has to be found from their net pay!

The sums involved are – from the perspective of a civil servant on a decent salary with a decent pension accrual – small. Most of the 800,000 will be losing out on is £5pm from next month. But that £5pm is considerably more important if you are on a low income. From the perspective of someone on £12,000 pa, £5pm is meaningful saving.

Indeed it is the kind of savings envisaged by NEST’s Sideca project as the sort of savings increment that the Sidecar would encourage.

NEST is one of the occupational pension schemes that does not fall into the net pay trap. People’s Pension also avoids the trap as does the much smaller supertrust. In hindsight, it would have been possible to require all employer and multi-employer schemes to set up a section where members could have received the Government Incentive of an extra 25% of member’s contributions while the rest of the scheme remained Net Pay.

But that would have meant that the administrators of occupational pension schemes bucked their ideas up. It would have forced them to put pressure on HMRC to find a work-a-round for them so that the incentives could be claimed using the proposal that have been put forward to the Treasury by NOW Pensions and the low-paid reform group.

But that would have pre-supposed that the people running large occupational pension schemes thought the problem outlined by James Coney at the top of this blog was important enough to trouble them.

Sadly, like those in the Treasury , the people who run large occupational pension schemes tend to be in the kind of high paid stable jobs which make net-pay arrangements so attractive.

Which is why you will not see the net-pay problem on the agenda of the PMI conference in April

Which is why it was not on the agenda of the PLSA conference last October or this March


Why are women’s pensions smaller than men’s?

The simple answer is that it’s not enough people give a damn. That is shocking but it is true.

We will not get any change to the gender pension gap until we start addressing the fundamental inequalities that I outlined in the bullets at the top of this blog.

Which is why we need International Woman’s Day and why men should be every bit as loud as women in crying foul over the ongoing inequality of the pension net pay fiasco.


pension inequality


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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2 Responses to Why are women’s pensions smaller than men’s?

  1. Eavestile says:

    Well said

  2. DC says:

    No argument that net pay will be disadvantageous for some, that is clear.

    What I don’t understand is why you think this is targeted at women?

    There might be a statistical imbalance in the number of women in this situation but it affects the participants equally in the pocket.

    No-one in forcing individuals to work these jobs, or to stay in them for a significant period of time. Although you could argue that by pushing up the minimum wage you will end up with more people working at the bottom of the job food chain for longer. I guess they are some of the victims of ‘progressive’ politics.

    For instance, statistically far more women benefit from State ‘top ups’ than men, free (or at a massive discount to market rate) housing, child benefit, Guaranteed pension credit and so on and so forth. Only women could siphon NI credits to build up their State pension entitlement (from inception until 2010 at least).

    That isn’t to say that the system is biased in favour of women. Or does it?

    “All of these advantages are menwards”

    There is no reason to think that if you had born a woman you wouldn’t be in the same position.

    It is unfortunate for the post-feminists and ‘gender pay gappers’ that statistically women prefer to be the ones raising their own children. That is their CHOICE.

    If someone CHOOSES to take time out of a career to raise children, that is THEIR DECISION. If you felt so strongly about financial disparity Henry, why didn’t YOU put your career on hold and allow your wife to continue hers? Was it by any chance because you came to a mutually beneficial arrangement? Was it because that was the best outcome available given the resources to hand? It almost definitely was.

    Crucially, did it cross your mind that by one of you producing spending LESS TIME IN EMPLOYMENT (or monetisation of effort, whatever you want to call it), that person would earn receive less overall employment benefits, including development opportunities, salary, pension, death in service etc? I’m going to guess that you acknowledged this before Olly was born but still decided to proceed anyway.

    There’s no point in complaining about disparity 20 or so years hence, when the person raising the child or working part-time has enjoyed the benefits of increased time with their child in exchange for less remuneration. I guess the old adage that “the best things in life are free” works both ways: they also don’t come with a salary, bonus or other benefits of employment. Complaining about this is simply denying economic reality.

    To put it another way, YOU only have what YOU have because you made a joint decision. And who benefits from those decisions? Well you both do, of course. The equity of finance may be unequal but it could have been the other way round had you made THAT CHOICE.

    Imagine you hadn’t had a child, and both careers continued to take their course. You might both have a higher degree of equity in your finances, but would you have been happy not having a child?

    “It is the role of Government to redistribute to citizens disadvantaged by systemic imbalances”.

    No it isn’t Henry, and why would/should the government intervene at all any more? It introduced legislation to enforce gender neutral ‘wages’ in the 70s. I’m not so naive to think that this 100% happens however to that I would say that where this can be proven in court anyone not complying with the legislation should be punished. Interesting how few employment cases actually arise from this legislation not being enforced.

    The problem with the ‘pay gap’ fallacy and associated dogma is that it doesn’t bear comparison with reality.

    What it fails to acknowledge is that you can’t (or shouldn’t) force people to strive for perfect equity as it is extremely unlikely to be achievable in the main. Not impossible mind you, some people/couples can raise children and have amazing careers. There’s no way I could work 60 hour weeks and raise a child, not a chance.

    The options of perfectly redressing the perceived economic imbalance are not financially viable, as you would essentially have to pay women to have children, or somehow monetise the delayed economic output 18 or 20 years in advance of the child actually earning their first wage. Can you imagine the problems in winding that back? Can you imagine the cost (at taxpayers expense, naturally)?

    Apologies for the CAPS in places but I guess my main point is that in Western society our main problem is acknowledging the benefits and consequences of our actions then making the right decisions. The last few generations appear to have built up a sense of entitlement such that one can have it all, and sacrifice nothing.

    Perhaps this is a contributing factor to why no civilization has previously enjoyed such a high standard of living but seems to have no driving force to accomplish more.

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