Women need to work extra eight years to make up pensions gap - report finds

Lower salaries and time out of the workforce mean women’s pension pots are 36% smaller than those of male colleagues

Women will have to work an extra eight years on average to earn the same pension pot as a male colleague, a new report from Irish Life has found.

The life company examined the 130,000 members of defined contribution pension schemes that it manages on behalf of private sector employees and found a gender pay gap of 22 per cent between men and women. In addition, Eurostat figures show that women, on average, take six years out of the workforce to care for children or other aged or dependent relatives.

This, Irish Life says, led to a 36 per cent shortfall at normal retirement age for women compared with men – a gap that would take eight years of work to bridge – even though women tend to start saving around the same age as men and contribute roughly the same proportion of their salary for retirement.

“While the gender pay gap gets plenty of attention across the globe, the gender pensions gap is less known despite it being much larger,” said Oisin O’Shaughnessy, managing director of employer solutions at Irish Life.

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The reported gap in pay is larger than figures featuring in gender pay gap reports that bigger companies are now obliged to file. This gap was attributed by Irish Life director of employer solutions, Shane O’Farrell, to the fact that women are three times more likely than men to work part-time and also because the study did not include the public service where pay gaps are narrower.

Irish Life found that women were twice as likely to be earning less than €30,000 annually while men were almost twice as likely as women to earn above €100,000.

This is the second pension parity report produced by Irish Life and Mr O’Farrell said the report published on Thursday showed “no significant change in relativities” from the last report published five years ago.

“Some of the changes we were looking for back then have not happened yet,” he said.

Figures from the OECD show that women are significantly more likely than men to suffer from poverty in old age – at 16.6 per cent compared to 11.1 per cent.

Among the proposals suggested in the report is an end to mandatory retirement ages – something recommended yesterday in the report of the Oireachtas Joint Committee on Enterprise, Trade and Employment on the pre-legislative scrutiny of the General Scheme of Employment (Restriction of Certain Mandatory Retirement Ages) Bill 2024 which is before the Oireachtas.

It also called for reform of rules that do not allow people to contribute to the pension pot of a spouse or partner during periods of unpaid leave in a tax efficient manner.

Pension scheme rules also mitigate against women in part-time roles and there is no flexibility in main schemes – including the planned auto-enrolment scheme – to allow workers or their employers to increase contributions on a worker’s return from unpaid leave, Irish Life said.

“The answer to achieving gender pension parity simply cannot be women staying on and working for eight more years while the men around them retire,” said Mr O’Shaughnessy.

A defined contribution pension pot is determined by three factors: how much a person saves into their plan; how long they save for; and the investment return on those savings.

Dominic Coyle

Dominic Coyle

Dominic Coyle is Deputy Business Editor of The Irish Times