The Women Against State Pension Inequality campaign is bringing inherent unfairness in the treatment of the genders to light, Adrian Boulding writes
Next month will see the women’s state pension age rise by another year to 65, reaching parity with men for the first time in a generation.
But SPA equalisation merely papers over the financial inequality that exists between these genders as they look to retirement.
That chasm has been vociferously articulated by the Women Against State Pension Inequality campaign over the past three years. The causes are deep-seated and the numbers do not lie.
We recently published research which found baby-boomer women were increasingly vulnerable to poverty in retirement compared to men of the same age.
Already, more than half predict working beyond age 65 – 10 per cent full-time and 44 per cent part-time. On average, that cohort plans to work for 4.3 years longer than the new SPA – almost 10 years longer than they originally anticipated.
According to Institute for Fiscal Studies research carried out last year, 60- to 62-year-old women with a delayed SPA were receiving £44 per week more in earnings than in 2016.
But despite this apparent pay rise, these women were actually worse off due to a loss of £74 per week in state pension payments and other benefits not accessed until SPA.
This is austerity in action, with the government saving £4.2bn from their state pension and benefits, while garnering a further £900m from income tax and National Insurance on their extra earnings.
So women are working deeper into their 60s than men, yet still appear to be worse off. Indeed, our study found a fifth of baby-boomer women had no personal pension provision at all, versus 9 per cent of men.
Of those who do have pensions, fewer have access to more generous defined benefit schemes – 43 per cent versus 54 per cent of men.
They fare little better in terms of defined contribution pension access, with just 11 per cent of baby-boomer women having such a scheme, compared with 19 per cent of men. Women also appear more at risk of making poor at-retirement choices than men. They have less access to financial advice – 17 per cent versus 23 per cent of men – and appear less engaged in understanding pension freedoms.
According to the government, two thirds of Pension Wise appointments are for male retirees.
Meanwhile, twice as many women have already dipped into home equity by downsizing to help fund retirement. Ten per cent of those we questioned had already downsized to help fund retirement, versus 5 per cent of men, and a larger percentage of women were open to this idea than men – 22 per cent versus 20 per cent of male respondents.
There is a deep-seated gender bias at work here, leaving women more vulnerable to poverty in their old age than men. Rising divorce rates among baby-boomers have not helped. We also need to remember women live longer than men. All this means advisers must recommend a much safer and lower-risk strategy for many female clients.
Adrian Boulding is director of retirement strategy at Dunstan Thomas