Unequal income in older age

The recent Parliament and Health Service Ombudsman report looks at the decision to equalise the state pension age, but it throws the spotlight on the fact that women don’t arrive at pension age with anything approaching an equal income to men.

jar filled with coins titled 'retirement'


The campaign for compensation for women in their 60s affected by the rise in the state pension – to equalise it with that for men – took a step forward last week when the Parliamentary and Health Service Ombudsman published a report. It says that Parliament should intervene and hold the Department for Work and Pensions [DWP] to account for failure to adequately inform women about the change and should seek to compensate them as quickly as possible.

The campaign has been going for many years after the 1995 Pensions Act and subsequent legislation raised the State Pension age for women born on or after 6th April 1950 – the so-called WASPI women. Many argue equalising the State Pension Age ignores the fact that women and men do not face an equal playing field in the lead-up to retirement for a number of reasons, including the unequal burden of caring responsibilities and the fact that women-dominated jobs and sectors tend to be lower paid than male-dominated ones.

Whether the Government actually compensates the women and by how much is another issue, however. The PSHO report points out that DWP has not acknowledged its failings or offered any apology or explanation for these and has indicated it will not compensate women affected by its failure.

The report comes as concerns about women’s income in older age are coming more under the spotlight. A recent Scottish Widows report focused on women in their 20s and found 10 per cent have opted out of their employer’s pension scheme, despite almost a quarter saying they would be frustrated if they couldn’t retire by the age of 60. The Government recently reported on the gender pension gap which it calculates stands at 35%.

Once again, due to a range of factors, of which caring responsibilities is a big one, women are likely to earn significantly less than men in retirement. Pensions companies have been talking about encouraging women to save more at an earlier age for some time. They have also been calling for the auto enrolment threshold to be lowered so money automatically goes towards pensions, with employers also contributing towards this. The threshold currently stands at 10K pounds and experts say that means many part-time workers – typically women – or portfolio workers [people with a number of part-time or self-employed roles] miss out.

Women who have gone part time or taken a career break when their children are young can also top up their pensions later, but that relies on them earning enough to do so. Career breaks have a big impact on earnings. So once again we come back to the unequal playing field and the lack of any way of officially acknowledging the unpaid care contribution of many people, especially women. Until men share the care burden more or we recognise care more – for instance, through carer pension credits  – equalising policies are likely to have a detrimental impact on many women.

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