The government should pay public money into the personal pensions of women who take time out of work to care for children or elderly relatives, a think tank has announced.
The Social Market Foundation said that without significant new support for women’s pensions, increasing lifespans will widen economic gaps between the sexes and see women’s wealth falling further behind men.
Longer lives could amplify existing differences between male and female earnings and savings, the SMF said, warning that without early intervention, changes in longevity could set back progress towards economic equality between the sexes.
The SMF made the warning ahead of publishing “Gender equality and the 100-year life”, the second in a series of reports, supported by insurance firm AIG, that address the public policy challenges raised by rising longevity.
The report includes new polling evidence, of 3,000 adults, that shows people still expect women to bear most of the burden of looking after children and elderly relatives.
The SMF said time away from work for family duties often leads to lower earnings. The report found that five years after graduation, men’s median wages are £3,600 higher than female graduates’. Ten years after graduation this figure rises to £8,400.
Lower wages over the rest of a woman’s life also means lower pensions savings. The SMF said women in their late 50s typically have around half the pension savings of men the same age.
To stop the gap widening, the think tank has said government should consider paying into the pension pots of women who take time out of work to care - because this is one of the key causes of the pension gap.
The think tank said: “Addressing the lack of pension accumulation during this period is essential if we are to close – or even narrow – the gap in pension savings between men and women.”
In 2016, the ONS estimated that a woman on maternity leave carries out weekly unpaid work with an economic value of £762.75, well above the average regular weekly wage. Applying the current three percent minimum contribution rates from automatic enrolment pensions schemes to such a value would mean a new government contribution of £22.88 per week, or £1189.89 per year, to that woman’s pension pot.
Research finings from the “Gender equality and the 100-year life” report include”