According to research by the Pensions Policy Institute (PPI), by their 60s, women will face being £100,000 worse-off in terms of pension wealth compared to men. The research, published by NOW:Pensions in the report “Facing an unequal future – closing the gender pensions gap” in July this year, found that women’s pensions wealth would typically stand at £51,100 by their 60s, while men of the same age would have a pension wealth of £156,500. Currently, 1.2 million women in their 50s have no private pension wealth. PPI research also shows that as women generally live on average 3.7 more years compared to men, to draw the same pension income throughout their retirees lifetime, they would need to have saved around five to seven per cent more than men by retirement age.
Last week, the High Court dismissed the judicial review into the changes to the state pension age for women, in which the claimants argued that raising their pension age “unlawfully discriminated against them on the grounds of age, sex, and age and sex combined”.
Lord Justice Irwin and Mrs Justice Whipple said: “The court was saddened by the stories contained in the claimants’ evidence.
“But the court’s role was limited. There was no basis for concluding that the policy choices reflected in the legislation were not open to government. In any event they were approved by Parliament.
“The wider issues raised by the claimants about whether the choices were right or wrong or good or bad were not for the court. They were for members of the public and their elected representatives.”
A DWP Spokesperson said: “We welcome the High Court’s judgment. It has always been our view that the changes we made to women’s State Pension age were entirely lawful and did not discriminate on any grounds.
“The Court decided that arguments the claimants were not given adequate notice of changes to the state pension age could not be upheld.
“This follows the extensive communications that DWP made to publicise these changes over many years.
“The government decided in 1995 that it was going to make the State Pension age the same for men and women as a long-overdue move towards gender equality. Raising State Pension age in line with life expectancy changes has been the policy of successive administrations over many years.”
Meanwhile, Sian Fisher, CEO of the Chartered Insurance Institute and chair of the Insuring Women’s Futures programme, said she hoped the news would focus minds on the wider retirement income problems which women are currently facing.
She commented: “I hope the High Court’s decision to reject a judicial review into how the government raised the state pension age for women will focus minds on the wider retirement income problems many women face today.
“The gender pay gap, plus the bulk of responsibility for care still falling on female’s shoulders, means women working today face being financially worse-off in retirement even than previous generations.
“There is also the issue that women working today are living longer than previous generations and therefore are likely to need more retirement income than their mothers and grandmothers did.
“We do not engage enough with women in relation to their retirement needs, on their own terms.”
According to the PPI research, 1.2 million women with dependent children are currently looking after their family and are missing out on auto enrolment pension contributions.
What’s more, the damage to women’s pension wealth is done whilst in their 30s, the report said.
LEBC’s Director of Public Policy, Kay Ingram, has warned that some people who carry out unpaid caring role in the home may miss out on National Insurance contributions due to not filling in the CH2 form for claiming Child Benefit – such as if they have opted to waive Child Benefit due to the High Income Child Benefit Tax Charge.
“Currently many younger women are losing their entitlement to State pension credits, simply because their partner is earning more than £50,000 and they have waived child benefit rather than be taxed on it,” Ms Ingram said.
She continued: “Women of all ages can take steps to claim additional state pension credits, if they are not earning enough to pay National Insurance due to caring responsibilities.
“This includes parents and other relatives caring for children under 12 and those caring for adults for more than 20 hours per week.”
Five-point plan for fairer pensions, according to NOW:Pensions
Removal of the £10,000 auto-enrolment trigger to get more women into auto-enrolment
This would bring an additional 1.4 million women in pension saving.
Auto enrolment contributions on every pound of earnings
This would improve pension part-time workers who are more likely to be women. This would increase pension wealth by 140 per cent at retirement.
The introduction of a family carer’s top up
Women taking time out to care are compensated in the State Pension by State Pension credits, however, they miss out on auto enrolment. The family carer’s top up would see the government pay the equivalent of the employers’ contribution at National Living Wage level into women’s pensions who are taking time out to care. This would equate to approximately £820 per year and would boost women’s pension outcomes by 20 per cent. The family carer top-up can close around half of the pension wealth gap created by taking time out of work to care for family.
Ensuring that pension funds are always considered in divorce settlements
Approximately 10 per cent of men and 14 per cent of women in their early 60s are divorced. The median pension wealth of divorced men and women by retirement is £103,500 and £26,100 respectively. These figures compared to the population indicate a pension wealth reduction of a third for men but a half for women, signifying a greater impact of divorce for women than men.
Although pension pots can often be the second most valuable asset when people are going through a divorce, they are often overlooked, with people paying more attention to property assets.
In 2018, there were 118,142 divorces but only 4,632 pension attachment orders were made by the family courts.
Greater action on the availability and cost of childcare to enable those that want to return to work
Despite tax changes that help families with childcare costs, prices continue to rise. The Family and Childcare Trust reported in 2018 that childcare prices for children under three had risen above both inflation and wages in the previous year. Costs grew by 7 per cent to £122 for 25 hours per week, equating to £6300 per year. Analysis of freedom of information request data by Insurer Royal London shows the high cost of childcare means working parents with toddlers pay more for childcare than their mortgage. A full-time nursery place for a child under two typically costs £1,065 a month, for example, while the average monthly mortgage repayment is £1,040 and the equivalent figure for renters is £833.