Revealed: A new generation of women face pension inequality

Pic credit: Siemens pension scheme

Just before the Parliamentary recess the House of Commons library produced a new report on pension inequality showing how a new generation of women will lose out again to men unless action is taken now.

The report- The Pension Gender Gap – makes stark reading for millions of women now in work. The focus in this report is on the hurdles facing women to get an equal pension with men.

The main hurdle is the private pension or second pension women receive to top up their state pension. It quotes a Women’s Budget Group pre-Budget Briefing which says that: ‘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’.

The pay gap – still at 7.9 per cent – between men and women is basically discriminating against women getting the same pension as men. When the Conservative government set up the auto-enrollment scheme for a workplace pension in 2012- funded by employers and employee contributions – they excluded anyone not earning enough to pay national insurance.

While it increased the chances of women getting a private pension ( from 40 per cent in 2012 to 86 per cent in 2020) their savings fall away after they reach 35 because they are bringing up children and often take part time work.

As the report says: “The design of automatic enrolment widens the gap between lower and higher earners in retirement and disadvantages those in second jobs.”

Women who take part time work or multiple part time jobs are simply excluded from getting a second private pension partly paid by their employer.

Some low paid women may never get a work pension

And those who never earn enough at work – there are an estimated 500,000 of them nearly all women – never get a second pension at all.

As the Association of British Insurers told MPs on the Commons Work and Pension Committee: “Women disproportionately work in lower paid jobs; 75% of those earning under the £10,000 AE earning trigger are women. They also make up the majority of multiple job holders, as much as 64%. This is significant as their total income could be over the AE earnings trigger, but as it is divided across multiple jobs they will not be automatically enrolled into a pension.’

Fortunately it looks like the Department for Work and Pensions is planning to do something about this though we may have to wait a couple of years before this happens.

A DWP spokesperson said :

“Automatic enrolment has helped millions more women save into a pension, with participation among eligible women in the private sector rising from 40% in 2012 to 86% in 2020 – equal to that of men. Our plans to remove the Lower Earnings Limit for contributions and to reduce the eligible age of being automatically enrolled to 18 in the mid-2020s will enable even more women to save more and start saving earlier.”

But this isn’t the only barrier. The report highlights three other issues, affordable child care, pension rights for divorcees and monitoring pension equality.

On child care the report highlights demands by the trade union, Prospect and the People’s Pension, one of the larger pension trusts, both call for help with child care including tax relief for the care of the under two year olds and a local authority grant for 3 and 4 year olds.

Make pension savings a compulsory part of a divorce settlement

The Pension and Lifetime Savings Association call for the law to be changed so pension rights have to be considered in divorce proceedings.

“The government should consider changing the law to ensure that pensions rights are considered on a mandatory basis as part of divorce. Currently pensions may only be considered if there is a financial settlement considered by the courts. The process of pension sharing on divorce could also be better streamlined to remove friction and delay for all parties.”

And finally the Government Equalities Office should impose a mandatory requirement on the DWP to publish gender pension gap statistics and then draw up proposals to speed up ending the gap. The GEO did not want to comment on this.

There is one ray of hope arising from the new state pension introduced in 2016. It has narrowed the gap between men’s and women’s state pensions. Women got 82pc of men’s pension in 2016. By 2020 it had narrowed to 92pc. But the DWP could not tell me when it would be 100 per cent.

Unless action is taking speedily a whole new generation of women are going to lose out to men. No one wants to suffer the fate of 50swomen who have been so badly treated again. They are already worse off because of the abolition of the second pension in 2016.

Chris Thompson, a retired pension expect, pointed out both men and women lost out over auto-enrollment. “Between 2012 and prior to 6 April 2016 when the new state pension started people were also paying into the state second pension if they were not contracted out.

” From the 6 April 2016 people ceased accruing state second pension so are now much worse off than under the old state pension system. A low earner about £46 pw worse off and a high earner about £67 pw. Another thing to remember is that losses do not take into account loss of inherited and derived rights, loss of GMP indexation if contracted out or increase in NI due to loss of NI rebate.”

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6 thoughts on “Revealed: A new generation of women face pension inequality

  1. I’m tad confused on one thing, nearly two decades now since i’ve been excluded from the system, but “they excluded anyone not earning enough to pay national insurance.” I thought everybody paid NINO contributions, no matter how little you are earning? I always did…and paid a lot more than I should have! Never got a rebate either…but that is besides the point. When did this change, or has it always been that way and i’ve had a lot more stolen from me than I realised?


    • Everyone is confused, including government and politicians in general, about the complexities around National Insurance.

      Being paid wages, in any one job, below the Lower Earnings Level means you do not pay National Insurance worker contributions, do not get government granted National Insurance credits towards your state pension, and have no right to statutory sick pay.

      The new flat rate state pension (state pension system since April 2016 for new claimants) requires a minimum National Insurance record of 10 years to get any state pension, but if you earn above the LEL but spread between more than one part-time job, they are not brought together, but kept separate, so don’t get NI credits from either job.

      Each year has uprating for wages from which you start paying worker National Insurance contributions.

      Back in 2010-11 tax year, the worker National Insurance contributions started from earnings of £5,715a year.

      This is 2022-2023 rates from government:
      Now Primary threshold (start paying worker NI contributions)
      6 April 2022 to 5 July 2022:

      £190 per week
      £823 per month
      £9,880 per year

      From 6 July 2022 to 5 April 2023:

      £242 per week
      £1,048 per month
      £12,570 per year (this is also your basic income tax allowance for years to come).


  2. Dear David Hencke,
    The changes are not said to come before 2050!

    No word about ending Lower Earnings Level of wages for worker National Insurance credits, below which do not get a state pension.

    Will you help me, Sir, to, please, gain the knowledgeable people to volunteer admin the Over 50s party into reality.

    Over 50s party alone offers in government, by your kind votes,
    – £35,000 compensation to 1950s ladies,
    – pension age 60 for men and women (1960s born men and women onwards), and
    – £400 per week state pension to all pensioners, old and new, regardless of National Insurance record.
    And so much else besides for all ages.

    And Over 50s party being the greatest Suffragette government, by your kind votes, in UK history, by unravelling the discrimination against women of all ages (even the grand-daughters yet unborn), that can only be done by MPs elected into government in general election.

    www over50sparty org uk


  3. Dear David Hencke,

    The pension industry always have said they cannot provide works pensions below your £10,000 a year wages.

    I fear Auto Enrolment levels of wages, down to just above the Lower Earnings Level to qualify for government granted National Insurance credits, might end up like the scandal of Married Woman’s Stamp, but in this case around works pensions?

    The government is not offering change til 2050!

    And how can a pensioner get sufficient contributions towards a decent works pension only between ages 66 and 75, and why pay, when the pension industry moaned about 85 per cent of people surviving to risen pension age of 66, so meaning death rate of 15 per cent under age 66 since women’s pension age rise. Men will have died due to loss of Pension Credit from age 60 since Welfare Reform Act 2012.

    It is pension age rise that is cause and effect of increasing early death rate of women aged in our 50s and 60s since 2011, but especially since 2014-2015.

    If the lowest waged got a full state pension of £400 per week, paid tax free (so does not deduct from your basic tax allowance), alongside everyone else, men and women the same, would that be better than paying into a works pension such a small amount, when the money is insufficient to live on, without needing means-tested benefit?


  4. I previously wrote a comment to the effect that until men can bear children and will take a fair share of the responsibility for childcare and housework, there can be no equality. Nice to know that this has been officially recognised but will the government accept this inevitable inequality and boost women’s pension shortfalls to acknowledge theirreplaceable service they give to our families and communities. Won’t hold my breath…..


  5. Pingback: Media Round-Up: April 2022 - Womens Budget Group

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