How does the gender pensions gap work for couples?

Most women operate within partnerships, usually with men , quite often with other women. We know too little about the impact of pension sharing – whether it be voluntary or by court order, but this is important. The Government analysis shows that the Gender Pension gap widens as women become carers – both of children and of wider families, women’s pension contributions and earnings only converge with men’s in the final years of careers – when caring responsibilities are likely to be more even.

So what is the deal we make within our marriages and partnerships? Are we creating a financial dependency by women on men’s pensions that is crystallised on separation? Do women have the comfort of knowing that they have rights to household income? Or is the unspoken rule “what’s mine is mine and what’s yours is yours”?

“Equalisation” is a thing in many parts of pensions. Sometimes it works against women (as with Unisex annuities) , sometimes it provides parity at a cost that diminishes everyone (as with GMP equalisation) and sometimes it is genuinely useful (take the proper implementation of pension sharing orders).

For progress to be made on financial equality we will need to better understand the bigger picture. The DWP’s focus is deliberately narrow and aimed to show up inequalities in private provision, but state pension provision is critical too. Many women who have historically paid NI at the lower married women’s rate or who are not accruing state pension credits because they are not claiming them, will find they are short of their maximum state pension. We need to add in state pension inequalities to assess “gaps” either at the macro or personal level.

There are no longer any special state pension arrangements for married couples. Each partner in the marriage or civil partnership needs to build up their own state pension through qualifying years, and cannot benefit from their spouse’s state pension (which will cease when that person dies).

The WASPI issue is theoretically about equalisation but has served to highlight how little financial security many women feel they have in later life. I do not think we can go back to different state pension ages or even compensate WASPI for the poor communication of change, those who feel insecurity, need rights to equal ownership of household income and/or better awareness of pension credit. The DWP’s efforts on the latter are commendable.

As regards financial services, bias’ within products have diminished as we adopted anti-discrimination policies from the EU. But product bias cannot prevent unequal contributions that result from the labour market. Implementing the 2017 AE reforms is likely to partially address the problem that many women are not included in AE. Addressing the net pay anomaly will precent many women from overpaying pension contributions and missing out on their promised incentives. These adjustments go some way to reducing the gender pay gap but they don’t provide women with the right to an equal share of household wealth.

In summary

  • So long as single women aren’t confident of their rights, there is more work to do.
  • We need to have a better discussion about women’s rights within marriage and partnerships
  • We need to provide more support to women who are on their own and especially those who don’t have access to financial guidance and advice.
  • The DWP need to think more the impact of relationships on the gender pay gap and focus on issues of dependency as well as independence.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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1 Response to How does the gender pensions gap work for couples?

  1. Richard Chilton says:

    This is still missing a consideration of Household Equivalence. Income levels needed for a certain standard of living are very much affected by household size. For couples splitting up, overall they are going to be poorer if they live alone afterwards. The key way they can improve their financial situation is to start sharing a home with someone else. That could be a new partner, a family member, a friend or even a lodger.

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