Submitted by Leo Kolivakis, publisher of Pension Pulse.
Simon Reid of the Independent writes on why pensions are a girl’s best friend:
Shocking figures from the Prudential published this week reveal that women retiring this year will end up with annual pensions worth around one-third less than men. Women will get an average pension of just £13,671 – while the average man’s annual pension will be £20,313. The £6,642 pension gender gap is because women are more likely to give up work to care for children or relatives, the Pru said.
Of course, the fact that women’s wages are still considerably lower than men’s is a big factor. The Office of National Statistics reports that the gap is as high as 17 per cent – a scandal in itself. On top of that, only around one-third of women currently retiring have built up an entitlement to a full state pension in their own right. For men, the figure is 85 per cent.
About 2.8 million women in the UK are due to retire this year. I suspect many will look at their meagre pension expectations and decide to work on for a few extra years to boost their retirement income. Few will choose – like the actress Helen Mirren, now three years past the current woman’s retirement age of 60 – to carry on working because they’re still much in demand. For most, it will be a financial necessity.
In terms of qualifying for a state pension, it may actually pay some women to delay their retirement until April 2010 if they can. The Government is changing the rules then, so that from 6 April next year women retiring will need only 30 qualifying years of National Insurance contributions to be entitled to a full state pension in their own right. Until then, women need 39 qualifying years.
Being aware of the changes is important in deciding about retirement timing but, frankly, waiting until you reach or near retirement to start worrying is too late. In an ideal world, we should all be packing away cash for our later years as soon as we start earning.
Experts suggest that, to get a decent retirement income, people should try to save half of their age as a percentage of their salary into a pension scheme. So if you’re 25, you should pack 12.5 per cent of your salary in a pension. At 30, it should be 15 per cent. By the time you reach 40, it should have hit 20 per cent.
In the real world, we all have more important things to spend our cash on than the future. But right now there are thousands of people who are a little more cash-rich because their mortgage commitments have shrunk. Using that cash to boost their pension pot is probably a better option than sticking it into a savings account.
It’s not just that most savings rates are so paltry at the moment, but that you also get tax relief on pension contributions. Non-taxpayers or basic-rate taxpayers get relief of 20 per cent, higher-rate taxpayers get 40 per cent. That means that higher-rate payers need to put just £60 into their pension to see their fund boosted by £100. Basic-rate taxpayers need only put in £80 to get a £100 injection.
Need another powerful incentive? Just ask anyone approaching retirement whether they wish they had put more into their pension. Anyone who says otherwise is either a happy fool or an Oscar contender.
Another article by the Telegraph reports that millions of women are expected to retire this year on annual pensions of almost £7,000 less than men:
It suggested that women who retire this year will have an average annual pension of £13,671, compared to £20,313 for men. It means women will retire on £6,642 less a year than their male counterparts.
A total of 2.76 women and 3.96 million men are expected to retire in 2009, with the average adult in Britain retiring at 58, according to the findings by Prudential.
Karin Brown, annuities business director at Prudential, said: “It’s still a shock to see so many women retiring at such a disadvantage to their male colleagues.
“The gender gap has become so firmly established because women have historically earned less than men, and still earn around 17 per cent less.
“When women have children, their pension contributions reduce significantly or stop altogether, and their state pensions often take a hit as well.”
She added: “The underlying problem that many people have insufficient pensions is never going to go away unless men and women start saving for their pension much earlier in life, ideally in their twenties or thirties.”
These articles serve as a stark reminder that the gender gap is alive and well, especially when it comes to pensions. Government policies need to address this gender gap, offering full state pensions to all women who worked 30 qualifying years, even those that can’t delay their retirement until April 2010.
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I have to say, although I typically like Leo’s posts, this is sloppy reporting and sloppy commentary.
the gender gap in wage may or may not be due to male versus female. As the article starts to alude to, females often are the primary caregivers at home. There are a few aspects to this
1) women often give up their jobs for a fair amount of time (discussed in the article)
however not discussed:
2) women often choose less time consuming/work intensive jobs even when they are employed, as they are still the primmary caregivers. those types of jobs have lower wages
3) women often work part time as well. again, those will have lower wages/hr than do full time jobs.
4) women “jump off the ladder” when they stay home with kids/relatives. Thus, even if they rejoin the workforce later on, they have lost the opportunity to advance to top positions.
A better comparison would be comparing men and women who are and always have been full time.
and a second comparison of men and women who have taken time off/worked part time/etc to care for family members.
your data is flawed SEVERELY.
I will use a personal example. We had women who started screaming in my group that there was wage discrimination of men vs women. (I’m a doctor). female docs only made 65% of what male docs made. but all docs in my group are paid the same (we make revenue per patient), so this doesn’t make sense.
but when we looked at the data:
-a CONSIDERABLE portion of the women docs worked 3-4 days per week and took less call. very few men worked 3-4 days per week and took less call
-women docs tend to choose family friendly fields like Pediatrics, family medicine, and OB Gyn, and eschew time intensive jobs like Neurosurgery and Interventional Cardiology. FP/Peds/Int Med make far less than Cardiology and Neurosurgery
when we normalized the data for FTE (full time equivalent) and for similar job description, the pay was 100% equal between groups, which of course it must be since we’re not salaried, we’re paid by revenue generated.
the same is occuring in your very heterogeneous English data.
Very sloppy math. Very sloppy “science”. very sloppy data. Very sloppy reporting.
it is POSSIBLE that it is pure sexism causing this problem, but you’d never know it with your poor data.
Anon,
I added one another article from the Telegraph on this issue. You raise some interesting observations, but I still believe that the gender gap has only recently started to close.
There is no question in my mind that historical wage disparities existed and were the driving force behind this pension gap between men and women.
Yes, women do have children and often need to take part-time work, but should we penalize them for this on their pensions? Think about all the single mothers out there who struggle to make a living and raise their children.
I think they deserve some adjustment to top up their pension so the gap isn’t as significant.
Your example is self-serving and I will explain why. You are a doctor. My father, brother and all my close friends are doctors.
My best friend is a radiologist. They have a pool system where the revenues from each act go into a pot. Some radiologists work harder than others, but they decided that is the system they will work with.
My friend tells me he didn’t like it at the beginning because he was working harder than others, but he recognizes the advantages now. As you get older, you can’t work as hard so this system helps the older radiologists maintain their income and allows female ones who work part-time to get more income while they raise their young children.
Of course, you will dismiss this system as ‘Canadian socialism’ but I think it makes perfect sense.
Going forward, laws are being passed in Canada, in the U.S. and around the world where women will be paid equal wages for equal work.
I say it’s about time! But let’s not forget there was historical injustice and many older women are facing borderline or real poverty in their late years because of this.
You can dismiss these articles as “sloppy” but you fail to acknowledge this historical injustice.
cheers,
Leo
All things being equal, if a man and a woman both retired at the same age, with the same pension, the woman would be ahead, she is going to live longer.
I suggest also that women “working” less is part of them living longer.
Slackers.
All these pension panic stories are characterized by a stunning failure to cite any evidence that people are living in misery during their retirement years.
Frank Dean,
Copy and paste this link:
http://www.prb.org/CPIPR/NewReleases/Holden2003.aspx
It was written back in 2003, and focused on early retirement. I fear things are much worse now. I quote the following:
"The difference was dramatic for nonwhite women: 31 percent of nonwhite women who retired at ages 62-64 were living in poverty a decade later, compared with 15 percent of those who had waited until age 65 or older. Poverty rates had increased during the decade for the early retirees, while they had decreased for those who retired at 65 or older. For white women, the initial poverty rates were much lower, but again there was an advantage for those who had waited to draw benefits until age 65 or older. Much of the increase in poverty rates during retirement was associated with widowhood. But even among women with no change in marital status, those who retired early were more likely to experience an increase in poverty during the first decade of retirement. Older white men were less likely than women to live in poverty, but the advantage for those who had retired at or beyond the "Normal" age was even clearer."
As far as other statistics, just because you do not hear of horror stories, it doesn't mean they are not out there.
Here is another more recent article stating that pensioners are better off in New Zealand:
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10565604
I quote:
"Only 2 per cent of New Zealand's retirement-age population were classed as below the poverty line in a 2008 OECD study. Just 13 of the 30 countries had poverty rates of less than 10 per cent among older people.
The study of 30 OECD countries compared the income level of retirement-age New Zealanders to median disposable income levels.
However, several organisations who work with older people said the study does not reflect the financial reality of New Zealand's retirees.
A transtasman comparison found Australia's older population in far worse shape, with 27 per cent of over-65s below the poverty line."
Listen to this podcast from Lew Rockwell with Walter Block. Block says that if women are paid 30% less than males and if they do the same amount of work as males, then men would soon be out of work since businesses would be getting a bargain by paying women less for the same amount of work. Thus, there must be some other reason for the discrepancy of wages.
As you’ll hear in the podcast, when Block first spoke about this, it didn’t seem to cause a panic. That is until someone asked why blacks are paid less too. The answer was the same.
http://www.lewrockwell.com/podcast/?p=episode&name=2009-03-25_109_how_i_got_in_trouble.mp3
Listen to this podcast from Lew Rockwell with Walter Block. Block says that if women are paid 30% less than males and if they do the same amount of work as males, then men would soon be out of work since businesses would be getting a bargain by paying women less for the same amount of work. Thus, there must be some other reason for the discrepancy of wages.
As you’ll hear in the podcast, when Block first spoke about this, it didn’t seem to cause a panic. That is until someone asked why blacks are paid less too. The answer was the same.
http://www.lewrockwell.com/podcast/?p=episode&name=2009-03-25_109_how_i_got_in_trouble.mp3
Of course, the fact that women’s wages are still considerably lower than men’s is a big factor. The Office of National Statistics reports that the gap is as high as 17 per cent – a scandal in itself. On top of that, only around one-third of women currently retiring have built up an entitlement to a full state pension in their own right. For men, the figure is 85 per cent.
Very interesting. I wonder whatever happened to Europe, the land of the enlightened, the socially safe, and the equal? And here I was, foolishly thinking socialism and equality went hand in hand.
Ah well, what does one expect from feudal nations, like most of Europe still is today. Case in point, nations like the United Kingdom (emphasis on the work “kingdom”), where most land is still owned and controlled by lords, earls, dukes, princes, and other such stupid medieval backwardness — I bet many American readers didn’t know that little detail about the UK.
Of course, we certainly can’t expect such backward-thinking lands like Europe to treat their women right, now, can we? That would be just too much to ask of them, now, would it. Sixty years of being allied with the U.S. was obviously not enough to teach them much about social justice and equality – they need at least 500 years to learn that lesson.
This is so telling about Europe, and the BS they spewed out for decades now. I’m glad somebody is finally challenging the European doublespeak.
It’s a good thing the sour-faced Europeans didn’t agree to help in Afghanistan, otherwise, with them in tow, the U.S. would have lost all credibility for encouraging equality among the sexes in the Middle East.
Vinny GOLDberg
Of course, you will dismiss this system as ‘Canadian socialism’ but I think it makes perfect sense.
actually I won’t. there’s no way you would know that of course because I posted as anonymous, I see the error of doing so. I don’t post often because I don’t always have something to add, and I’ve seen the animosity towards ex-Calculated Risk folk and those who aren’t as smart.
My only argument was with the assertion that it is “egregious” that women make less than men. (using very very bad data). If a society chooses to pay it’s childrearing citizins for childrearing I’m all for it (such as “Family Allocations” in France)
Going forward, laws are being passed in Canada, in the U.S. and around the world where women will be paid equal wages for equal work.
this will help but will not be enough as the childrearing person is unlikely to ever have equal “work” compared to a nonchildrearing person, for the reasons I elucidated above.
giving pension credit for childrearing would do far more to help the pension woes you discuss.
BUT A QUESTION: does not the childrearing spouse often get credit for their spouse’s work? if so this may not be as big a deal as you say. (so the childrearing spouse gets “stiffed” on their pension, but they still get their working spouse’s pension). I’d be interested in an answer here, and acknowledge you as the expert
You can dismiss these articles as “sloppy” but you fail to acknowledge this historical injustice.
excellent point.
I guess for me the importance of this hinges on what the percentages of women are who
-worked “equal” to or “more than” men but got paid less due to historical sexism
-worked “less” than men due to childrearing, but got their spouse’s pension
-worked “less” than men due to childrearing, and also didn’t benefit from spouse’s pension
because I’m not sure that it’s wrong if a woman has a lower pension due to working half time but also gets her husband’s pension due to his full time work.
anyway:
my gripe is with the VERY VERY POOR data used to make the argument, not the argument itself.
if you wish to argue that women should get special allocations for their role as childrearers then that is a completely different topic that I’m more than willing to entertain.
if your argument is that historically women made less due to glass ceilings and sexism, you have no argument from me.
I really only dislike this:
“The Office of National Statistics reports that the gap is as high as 17 per cent – a scandal in itself. “
FROM THE OFFICE OF NATIONAL STATISTICS WEBSITE ITSELF REGARDING THIS ISSUE:
Although median hourly pay provides a useful comparison between the earnings of men and women, it does not necessarily indicate differences in rates of pay for comparable jobs. Pay medians are affected by the different work patterns of men and women, such as the proportions in different occupations and their length of time in jobs.
http://www.statistics.gov.uk/cci/nugget.asp?id=167
signed,
the first anon from this thread.
I will use the moniker PSEUDONYMOUS going forward.
Anon: Very sloppy math. Very sloppy “science”. very sloppy data. Very sloppy reporting.
Really? I disagree. I think Leo is right on the money with this post. My wife works in the UK as a doctor, she works full time, and professionally she is far better and faster than most UK-trained doctors in that practice. Yet, she still earns less than the male doctors there, most of whom are British-born brandy-loving, research-phobic medicine-semi-ignorant, good ole’ boys, who somehow always manage to see more private patients than NHS patients, despite the rules, not to mention fairness and decency.
The fact is, the UK remains one of the most racist and unfair nations in Europe. There is no difference between the UK or Italy in that regard, except that the British have learned to better disguise their true colors, and to justify their behavior through twisted intellectual BS (very much like you did in your post).
That’s another reason we count the days until the end of her contract so we can return to the U.S.
May I politely (British-polite, that is) suggest you get your chauvinist head out of your as* and see reality for what it is?
Vinny GOLDberg
Sorry, Anon of 9:22, whose use of capital letters says he for some odd reason is emotionally invested in this issue.
Single women (and I mean the childless type) are underpaid too. Blaming pay disparity on career interruption doesn’t cut it. It is pervasive on Wall Street (very few women sue, since they’d never work in the industry again. Better 3/4 of a very rich loaf than none). And those women who do have kids have (at least until the bust) hot and cold running nannies, no career interruption.
Yves et al:
you seem to misunderstand my argument.
what I am not arguing:
1) that women are paid equally to men
2) that women don’t face sexism
what I am arguing:
1) your data (the research cited) does not prove the point you are trying to make, the argument being that women are scandalously paid less than men for comparable work.
the research itself is being done to show one thing (average hourly wages of men and women). You are twisting the research to mean something quite differently (average hourly wages of men and women doing comparable work), something the authors themselves deny.
in other words: sloppy work.
I am not overly emotionally interested in this. I am a researcher, and understand the scientific method (statistics, probability, sampling, error, controls, etc). I also personally ran this exact data in my own very large organization because of people like you, who evidently are emotionally interested in misusing data. I also have spoken with the researches who publish the same data in the US.
as I said above, I don’t post here often (very rare) because of things like this. But in this one case I do understand the topic fully, so will stick to my guns.
You. Are. Wrong. You have no leg to stand on.
I will leave you with the quotes written by the author that you are citing as “proof” of your assertion, since evidently you all missed it.
FROM THE OFFICE OF NATIONAL STATISTICS WEBSITE ITSELF REGARDING THIS ISSUE:
Although median hourly pay provides a useful comparison between the earnings of men and women, it does not necessarily indicate differences in rates of pay for comparable jobs. Pay medians are affected by the different work patterns of men and women, such as the proportions in different occupations and their length of time in jobs.
if you want to make your point better, (it can very likely be made), go find a data source that looks at male vs female wages/salaries that controls for occupation, education, duration of service, and uninterrupted time of service.
when you do that, you will find as I did: the disparities in pay between men/women doing comparable work is not as great as the data you cited.
====
FWIW: if you notice, I did not argue or challenge the data that women receive lower pensions. I only asked if they received their spouse’s pensions. (and did not get an answer by the way)
and lastly:
it does make me slightly nervous that I am basically called a sexist because I correctly challenge data that is used erroneously.
does the same twisting happen with economics data?
pseudonymous. (and anon from 922am and 114pm, not anon from 1019)
as for Vinny Goldberg:
are you sure your wife isn’t paid less because she’s a foreigner?
do you have empiric evidence that she is so much better than her English born peers?
your story, while interesting, does not help prove the point that women make less than men for comparable job. Her foreign status is what we would call a “confounding factor”. it obfuscates the issue as opposed to clarifying.
I would not be surprised if she is making less because she’s a foreigner. again though, no way to know.
Lastly:
to Leo: rereading my first post the tone was more negative than it should have been, so I apologize for that. it was supposed to be an irritated tone for misusing data, but it comes off more scolding than I intended.
Happy easter.
Pseudonymous