A Pension Time-Bomb if you’re the wrong side of the pension gender gap
I have published details of the work that Prospect Union have done and are doing to narrow the pensions gap. I am pleased that I can follow this up by a disturbing article by Corporate Adviser’s Emma Simon about a threat in an area that I thought was improving, the gap between women’s and men’s public sector pensions.
Political plans to reform public sector pensions risk widening gender pension gap
The article continues
However, this new analysis from the union Prospect shows that the gender gap now stands at 32.9 per cent (for the 2023/24 year) — a figure which it describes as still “unacceptably high”.
This gap between men and women’s pensions is 3.6 percentage points lower than the previous year, but it does mean the women pensioners receive on average £7,200 less a year annual than men.
The union however has warned that even the slow progress being made on this issue to date, risks being undone by policies put forward by Reform, particularly in relation to public sector pension schemes.
This matters not just in local politics, the Pensions Commission is looking at pensions from a national point of view and though its final report is due in 2027 , the implementation of its recommendations could well be stymied by a new Government.
It says that there is a danger that political parties seeking to address the cost-of-living crisis start to see pensions as part of the “so-called culture wars” and seek to shut down public sector schemes to new entrants. This they warn will further exacerbate the gender pension gap in years to come.
Overall it says there has been a long-term reducing in the gender pay gap due to greater female participation in the workforce over past decades; greater female participation in pension schemes (relative to male participation – particularly driven by part-time workers) over this period; increased state pension entitlement for women (relative to men – driven by the introduction of HRP and, much later, the new state pension) and relatively high levels of women enrolled in DB schemes compared to men, especially in the public sector.
Our Pensions Minister recently told a Pension Age audience that this was a reason to be “perky“.
The two points quoted below sound wonderful, but amount to enabling member benefits to accrue absent the contributions normally required from the member:
“- Making authorised unpaid absences of periods under 15 days automatically pensionable
– Make unpaid additional parental leave automatically pensionable (with the cost met by employers)”
Great for the members in question, but the cost of providing these additional benefits must fall on someone, so who is that? Only two ‘funding’ sources appear available: either other members must contribute more/accrue less benefits OR council tax payers must contribute more money.
It seems obvious which of these two will be the one that actually pays: taxpayers.
Next, we have the statement, “Prospect has called on the government to adopt the measures across other public sector schemes”. Of course Prospect calls for additional benefits for its members. This is the raison d’etre of a union — batting for its members.
But is it equitable that the taxpayers funding much of this generosity get no real say in the matter?
Afterall, most of these taxpayers are themselves already struggling to fund their own pension provision, and a sizeable number — the self-employed — have little-to-no non-SP provision of their own accruing at all, yet their taxes are being directed towards making another cohort’s pensions more generous.
When you drill down into “who actually pays?”, it’s not difficult to see why a growing number of people might view this as an inequitable two-tier system: decent pension provision for public sector workers, sub-par pension provision — or worse — for many of the rest, with the former well-provided group funded principally by the latter poorly-served group who, partly as a result, cannot afford to make sufficient provision for themselves. It’s only rational for them to be unhappy about this inequity.
This disparity in provision and of its funding arises, and has survived, only because of its opaque nature. Given greater transparency, the unhappier some people — those funding it via their taxes — are likely to become. I am not a Reform supporter or voter, but can you blame some politicians for beginning to focus on the matter of public sector pension provision and upon whom its cost falls? It seems like an open goal, and a substantial constituency will be supportive.