Gender gap in pensions – Mark Musu

It is a fact that there is a gender pay gap in the world. But women also face a pension gap compared to men.

The reason for the gender pension gap is clear: less money earned, less contributions to the system, less pension earned.

Women are paid less than men

In the EU, the difference between the average gross hourly wages of male and female employees as a percentage of male gross wages in 2020 was 13%, ranging from 0.7% in Luxembourg to 22.3% in Latvia. The gender pay gap in Malta was 10%, which puts us in ninth place in terms of pay parity.

There are various reasons for this discrepancy. In Malta, it is twice as high for women working part-time as for those working full-time. The highest gap is in real estate (29.7%) while it is lowest in construction (3.2%).

At EU level, the European Commission has given priority to reducing gender pay, earnings and pension gaps and thus to combating women’s poverty. Malta fully subscribes to this framework and is committed to further narrowing this gap.

Some progress has been made through the introduction of free childcare, the in-work benefit scheme and other measures, with positive implications for the pension benefits that women will receive later in life. life.

Over the past 10 years, the gender pay gap has been reduced to 10%, but official statistics still seem to indicate a narrowing of the gender pension gap.

Women have lower pensions than men

Less well known is the chasm between men and women when it comes to retirement. The average gender gap in benefits worldwide is almost 30%, the gap being defined as the difference between the average male pension and the average female pension, expressed as a percentage of the average pension men.

This gap at 65 or over was around 27.5% in the EU in 2020, ranging from 1.1% in Estonia to 39.3% in Malta, the highest in the Union.

It worsens between 65-74 years and 65-79 years.

In general, employment considerations, system design and socio-cultural issues contribute to this disparity. The fact that women tend to have less linear career paths than men, work part-time at some point, have shorter careers due to raising children and caring for the elderly, and to retire earlier than men for various reasons, all have a negative impact on their eligibility. and credits in the retirement pension system.

Looking in more detail at the gap in Malta (retirement pension and survivors’ pension, excluding private pensions), the gap in 2022 was 18.2% in the 61-64 age bracket (2,220 women ), worsened to 20.1% for those aged 65-74 (13,130 women), then improved to 10.2% in the age group 75-84 (5,870 women) and 85- 94 (1,480 women, where it bottomed out at 7.9%), but deteriorated slightly in the 95-104 age group (only 130 women) to 12.4%. The average weekly deficit varies between €8 and €20 per week depending on the different wage bands.

Continuing to reduce the gender pay gap through targeted measures will contribute to-Marc Musu

Recent measures to close the pension gap include the gradual granting of the equivalent of the deceased spouse’s full retirement pension to those in receipt of a widow’s pension; contribution credits for women who have ceased to work for parental reasons; the revision of certain pensions where there was still discrimination based on sex; and other measures to help people fill gaps in their contributory record.

The apparent “regression” is mainly due to the fact that in 2015 a new annual bonus began to be paid to people (mainly, but not limited to married women) who have less than 10 years of contributions. social security and were therefore not eligible for a Pension. About 14,000 women now receive this retirement benefit, instead of receiving nothing. But the statistical result is that it unfortunately results in a lower overall average pension, which has inflated the pension gender gap by about 12 percentage points.

Another positive measure will have a similar statistical effect – the extension of eligibility for a reduced minimum pension for persons (again, mainly but not exclusively married women) who worked before reaching the age 19 or before January 1979 and have paid at least 10 years of contributions.

Another 2,000 women receive a relatively low pension, instead of receiving nothing, but again, perversely reducing the average pension paid to women.

Despite the perverse situation mentioned above, the gap has improved slightly since 2018. Whatever the reason, the gender pension gap presents urgent challenges as women face their retirement years with fewer benefits and therefore serious financial challenges. And since women on average live longer than men, this problem gets worse over time.

What can we do about it?

Continuing to reduce the gender pay gap through targeted measures will contribute to this. Employers can implement more flexible workplaces and policies that will encourage more women to join and stay in the workforce. The pandemic has proven that alternative working styles can thrive.

In recent years, the government has allowed individuals (mostly women) to make additional payments to reduce missing contributions in their contribution history.

The just-announced changes to parental leave for fathers could ease the burden on women, usually the primary caregivers, although it could be argued that more is needed.

The government is also committed to integrating the protection of pension rights into separation or divorce proceedings.

Mark Musu is Permanent Secretary, Ministry of Social Policy and Children’s Rights.

Independent journalism costs money. Support Times of Malta for the price of a coffee.

Support us

Previous The EPFO ​​pension scheme can cover non-unionized workers
Next Top 2022 under 25: Timothy Liljegren is n°4