The gender pension gap is significantly larger than the average gap in earnings between men and women, according to a new report
Retired women living in the EU receive considerably less retirement income on average than their male counterparts – more than double the average gender gap in earnings – new research has found.
HR consultancy firm Mercer reports that the average gender pension gap in the EU (measured by annual pension received and based on Eurostat data) is currently 40 per cent, compared to an average gender pay gap of 16 per cent.
The severity of the gender pension gap varies widely from one EU member state to another – between four and 49 per cent.
Germany and the Netherlands are among the countries with the highest gender pension gap – between 40 and 49 per cent – while Hungary and Estonia have the smallest gap – between four and 10 per cent.
In the UK the gender pension gap stands at 39.5 per cent.
Gender pension gap ‘highly relevant to companies’
A failure to address the substantial difference could cause long-term problems for business and governments, according to Mercer:
“The pensions gap should also be [at the] front of employers’ minds,” said Mandy Schreuder, diversity and inclusion consultant at Mercer.
“Women live longer, but with lower levels of savings they face a higher risk of retiring into poverty than their male counterparts.
“The gender pay gap may be a hot topic at the moment but few of us consider the impact it has, in combination with career breaks, on the financial wellness of women in retirement.
“Coupled with an ageing European workforce, this challenge will be highly relevant to companies over the coming years,” she added.
The huge discrepancy between pensions payouts for men and women is reportedly due to an under-representation of women in the workforce, lower pay and family-related career breaks.
The current level of inflexibility in pensions systems and women’s risk-aversion and lack of confidence in retirement planning is also cited as a problem by experts.
Eve Read, head of proposition, DC & financial wellness for Mercer said: “Most retirement plans are designed for a 40-year-long, continuous, full-time career with few breaks, and do not reflect women’s divergent needs.
“Companies should review their benefits plans and communications through a gender lens to ensure they address the specific issues and needs of the female workforce.”