Women Five Times More Likely to Be Out of Paid Work Due to Caring Commitments Contributing to Gender Pension Gap

The gender pension gap remains a pressing issue, with women facing a significant disadvantage compared to men in retirement. Recent data from the Trades Union Congress (TUC) underscores the severity of this problem. Below, we explore the issue, the TUC’s concerning discoveries, and what can be done to resolve it.

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Understanding the Gender Pension Gap

The gender pension gap concerns the difference in retirement income between men and women. According to recent analyses, the disparity is estimated to be 37.9%. This means that women receive, on average, £7,000 less per year in pension income compared to men. 

Worryingly, this imbalance is more than double the current gender pay gap, which stands at 14.3%. The TUC has stated that this essentially means retired women are going over a third of the year without receiving any pension income.

Several factors contribute to this inequality, including the gender pay gap, lower participation of women in full-time work, and the disproportionate amount of unpaid care work undertaken by them. 

Women often take career breaks or reduce their working hours for caring commitments, directly impacting their pension scheme contributions. This issue is compounded by structural inequalities within the pension system itself, where women are less likely to meet the eligibility criteria for pensions due to these career interruptions.

TUC Calls for Pension Reforms As Unpaid Care Drives Disparity

Recent TUC analysis highlights the critical issue of unpaid caring responsibilities as a significant contributor to the gender pension gap. Their data indicates that women are nearly five times more likely than men to be out of paid work due to these caring commitments. This is a problem, as during a work hiatus, individuals aren’t contributing to their pensions, leaving them financially vulnerable in retirement.

This issue is particularly prevalent among younger women, with those aged 25 to 34 most affected. However, black and minority ethnic (BME) women are even more likely to be impacted compared to their white counterparts.

As a result, the TUC has called for the government to take urgent action to close the gender pension gap. This includes ensuring that women out of work with caring commitments can build up state pension entitlements. They also recommend reforming the pension system to make it more inclusive for those in low-paid or part-time work—roles disproportionately occupied by women.

Closing the Gender Pension Gap: Government Reforms and Employer Strategies for Fairer Retirement

Addressing the gender pension gap requires a comprehensive strategy, including government action and proactive employer initiatives.

In light of the TUC’s findings, the government should consider overhauling the current pension system. One critical reform would be to lower the earnings threshold for auto-enrollment in pension schemes, making it more accessible to low-paid and part-time workers, many of whom are women.

Additionally, policies that recognise unpaid care work as pensionable should be introduced. This would protect women’s pension contributions when they are disproportionately engaged in caring commitments, preventing them from being penalised for taking on these vital but unpaid roles.

Furthermore, the government should continue to enhance day-one rights to flexible working, ensuring these options are available to all employees. By making flexible working universally accessible, both men and women can share caregiving responsibilities more equitably, alleviating the burden on women and helping to close the gender pension gap.

However, closing this gap is not solely the government’s responsibility. Employers also play a crucial role. They can begin by ensuring that women have equal opportunities for career advancement, especially after periods of caregiving leave. Supporting women’s career progression post-leave can mitigate the long-term impact on their pension savings.

Employers should also review their pension policies to ensure they are inclusive and not inadvertently disadvantaging women. This could include offering higher employer contributions to those returning from caregiving breaks or providing flexible pension options that cater to part-time workers.

Lastly, employers can support gender equality in caregiving by promoting flexible working arrangements and shared parental leave. By enabling families to share caregiving responsibilities more equally, employers can help reduce women’s time out of paid work, narrowing the gender pension gap.

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We hope you found this employment update on the gender pension gap helpful. If you have any questions related to employment law or believe your rights have been breached, please don’t hesitate to contact us. Redmans Solicitors are employment law specialists, and with our years of experience, we can help you seek justice.

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