2024 gender pension gap
This article originally appeared in the July 2024 issue of the Irish Broker magazine.
Irish Life, Ireland’s leading Defined Contribution (DC) pension provider recently revealed the findings of the 2024 Gender Pension Gap Report, which gives a clear snapshot of the pension gap between working women and men in Ireland. It also examines the causes and poses solutions for the government, employers and individuals to close the gap.
The research analyses data of over 130,000 Irish Life defined contribution plan members and highlights the pension inequality faced by working women in Ireland, as a Gender Pension Gap of 36% is revealed. This means women in Ireland will need to work 8 years longer to retire with the same pension pot as men.
Irish Life identifies two main drivers of this gap for working women: salary differences and time out of the workforce. The report finds that women’s salaries are on average, 22% less than men’s and combined with 6 years* leave out of the workforce for women, (mainly maternity leave and family caring responsibilities**), results in significant differences in accumulated pension funds. The impact of this aligns with the 2023 OECD finding that working women are 50%*** more at risk than men of pension poverty due to inadequate pension funding. This is particularly important as women can expect to live longer in retirement due to their higher life expectancy.
The data shows that the average age to start a pension is the same for both men and women and that men and women contribute comparable percentages of salary, confirming that saving habits play no role in the Gender Pension Gap.
Shane O’Farrell, Director, Employer Solutions at Irish Life, states;
“While the Gender Pay Gap gets plenty of attention worldwide, the Gender Pension Gap is not as well understood. This is despite the Gender Pension Gap being much larger and having a significant long-term impact. The answer simply cannot be women continuing to work for 8 more years while the men in their workplace retire”.
As Ireland’s leading pension provider, raising awareness of this issue and shining a light on potential solutions is a key focus for us. When it comes to levelling the playing field and remedying the Gender Pension Gap, we all have a part to play. Improvements can be achieved by implementing the right reforms to gender-proof pension policy; for example, with Auto Enrolment on the horizon, hopefully it’s not too late for government to act on this.
Another option for employers to help address the Gender Pension Gap at source before it has a chance to compound, is to introduce a pension specific workplace policy, adding an additional employer contribution for a period of time for women returning from maternity leave. We’ve taken this step ourselves to begin to address this gap.
There are plenty of solutions to help address the Gender Pension Gap, but the first step is to shine a light on the issue and create awareness that women working for 8 more years than men clearly isn’t an option.”
The importance of additional voluntary contributions (AVCs) as a key input to closing the gender pension gap cannot be dismissed. The Irish Life research shows that those who make AVCs – whether in a lump sum or regularly, are in line for a pension pot 150% larger than those not making any AVCs. Men are 60% more likely to make once-off AVC payments and are also 12% more likely to make regular AVC payments than women. This proactivity differential may be explained by the confidence disparity between men and women when it comes to pensions and finances.
The findings show that overall proactivity is key, with Irish Life calling on all stakeholders, including government, pension providers and employers to play their part in economically empowering women in the workforce to reduce the Gender Pension Gap.
Specific reforms are needed to gender-proof pension policy, with opportunities for the State and pension providers to drive more societal awareness of the Gender Pension Gap and provide gender specific education on this issue. Employers can also make a difference by assessing and evolving their own benefits and supports for women in their workforce, to level the playing field. At an individual level, financial literacy is a key enabler to empowering women to be more informed, more proactive and more in control of their financial future.
For further information on Gender Pension Parity, please visit: https://www.irishlifeemployersolutions.ie/ genderpensionparity/
*European studies suggest that on average women spend 4.5 years less in paid employment than men, though in Ireland that gap is wider at 6 years, according to Eurostat.
**CSO data shows that women are much more likely than men to take time out to have children or – even after maternity leave – to raise a family, with 445,500 women identifying themselves as carers, or the person who looks after the family, while only a relative fraction of men (9,200) fill this role.
*** 16.6% of working women today face the prospect of old-age poverty rates, while only 11.1% of working men today face the same circumstances, due to inadequate pension funding. 2023 OECD report