UK Policy Briefings
Spring Budget 2021: Pensions and Gender
Date Posted: Monday 1st March 2021
- State pensions in the UK have been among the lowest in the OECD, nearly £40 per week less than the threshold of eligibility for the means-tested Pension Credit.
- The new Single Tier Pension is only just above the single rate of Pension Credit if paid in full, but women are less likely than men to have the required 35 years of contributions or credits.
- A tax-funded Citizens Pension, payable to each pensioner at a level similar to the Minimum Income Standard, would be a better way to ensure women have a basic independent income in retirement.
- Private pension schemes, promoted and subsidised by UK governments, are the main reason for the gender gap in pensions, placing women at a disadvantage due to their domestic roles and lower pay.
- Among 65-74 year old median private pension wealth is £164,700 for men and £17,300 for women (who have just over 10% of the private pension wealth of men). Among the population as a whole women’s median pension wealth is £4,300, less than a quarter of the £19,800 held by men.
- Auto-enrolled private pensions, while including all employers, exclude low-paid employees and, like other private pensions, make no allowance for periods of caring, hence perpetuating the gender gap in pensions.
- Modelling has shown that a Family Carer Top-up in auto-enrolled pension schemes would substantially boost women’s private pension wealth. We conclude that a Voluntary Earnings-related State Pension Addition (VESPA) – an auto-enrolled option that is fully portable and allows carer credits – would be simpler and would better meet women’s needfor extra pension saving.