Pay Gap, But Worse: Why We Should Be Talking About the Gender Pension Gap

By Berit Braun.

International Women’s Day is often used to highlight the gender pay gap – one of the key metrics that prove that women and men in Europe and around the world are still far from equal. It is a persuasive argument. Statistics don’t lie, and women literally get paid less for doing the exact same work as men. However, the discussions that follow this realisation often frustrate me. They read like a never-ending to-do list: Women should stop being coy and ask for a pay rise. Women should start their own businesses. Women should go into STEM instead of traditionally female occupations. Girls should code. While all this is not bad advice per se, I feel that it not fair to ask the female population to solve this problem singlehandedly, while already shouldering the double burden of a regular job and unpaid domestic work as well as doing most of the emotional labour at home and in the workplace. It is neither fair, nor in the least bit efficient.

Personal finance in general is a feminist concern that is often neglected in favour of juicier issues which make better headlines, or topics that are more ‘accessible’ to a broader public. Pursuing feminism and setting aside financial equality is like learning to cycle without a bike. Financial inequality is both a cause and a symptom of wider inequality, and never more so than in retirement. The disparity between men and women’s pensions across the EU is a jaw-dropping 40% on average, with the Netherlands, Luxembourg, Germany and the UK leading the table. The more affluent a country, it seems, the wider the gap.

A combination of causes lead to this gaping inequality, with the pay gap being only one of them. Women are also more likely to spend their disposable income on caring for others instead of investing it for themselves, are less likely to be in formal employment and are more risk-averse when it comes to investments. They also continue to have and raise children, even though, from a financial point of view, this does not necessarily result in long-term returns. Given the higher life expectancy for women, less money has to last longer. It is therefore no surprise that retired women in the EU are three times more likely to live in poverty than their male counterparts.

While the current situation in many parts of the world is disheartening, the gender pensions gap is an issue that can be addressed easily both on an individual and a collective level. A closer inspection of smaller EU states, for example, yields potential blueprints of good practice for larger nations – Estonia and Denmark can boast gaps of only 4 and 7% respectively. In both countries, statutory pensions are mainly flat-rate and largely not dependent on earnings. Furthermore, Denmark has been actively targeting the gender pension gap since 2005 through specific initiatives to reduce the deficit, and to encourage cooperation between government, employers and employees. On an individual level, small actions can have an even greater effect, and indeed one which is sorely needed in many leading economic nations. 77% of women in the UK, for example, have ‘no idea’ how much money they need to retire.

Thinking and talking about something so mundanely significant as pensions can make a world of a difference decades down the line. On occasions such as International Women’s Day, we should not shy away from moving pensions and financial equality further up our list of priorities.

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