The Trades Union Congress (TUC) has called for urgent action from the government to address pension inequalities, after new analysis revealed that women are more than twice as likely as men to miss out on automatic pensions enrolment. The TUC's research found that approximately 10.9% of female employees (1 in 9) are in jobs where their employers are not required to enter them into a workplace pension, compared to just 4.3% (less than 1 in 20) of men.
The analysis also highlighted regional disparities, with Northern Ireland (15.2%), the West Midlands (14.5%), and Wales (14.2%) having the highest proportions of women employees who do not qualify for auto-enrolment. On the other hand, London (7%) has the lowest proportion. These discrepancies indicate a pressing need for action to address the gender pension gap, as women continue to be disproportionately affected.
Under current regulations, employers must automatically enrol workers earning £10,000 or more per year into a pension scheme and make contributions on their behalf. However, around 1.4 million women earn less than this threshold, leaving them without an occupational pension. This issue becomes even more concerning when considering the future reforms proposed by the government, such as lowering the age threshold for auto-enrolment to 18. The TUC's analysis revealed that a significant number of young workers, especially women, in low-paid and part-time jobs do not earn enough to be automatically enrolled. Specifically, more than one-third (36%) of younger women and 15% of younger men aged 18-21 fall into this category.
The gender pension gap has reached an alarming level, with an estimated income gap of 40.5% between men and women in retirement. This figure is more than double the current gender pay gap of 14.9% and represents the highest gender pension gap since 2015-16 when it stood at 40.7%. The TUC has identified several key drivers behind this disparity.
Caring responsibilities, where women are more likely to take time off work or work part-time to care for children, significantly impact their ability to accumulate a sufficient workplace pension.
The gender pay gap, resulting from women earning less than men over time, also contributes to the pension gap. Furthermore, gaps in pension auto-enrolment disproportionately affect low-paid workers, who are more likely to be women.
Lastly, historical differences in National Insurance have led to lower state pensions for women on average.
The TUC emphasises that unless these disparities in pension wealth are addressed, the gender pension gap will persist when today's workers reach retirement. TUC General Secretary Paul Nowak has called for increased investment in childcare and social care, industries where women are predominantly employed. He believes that closing the gender pay gap and improving retirement incomes for women starts with these investments.
To address the gender pension gap, the TUC has proposed several measures for the government to consider. Firstly, a statutory requirement for ministers to report on the gender pension gap should be introduced, accompanied by an action plan to tackle this issue.
Secondly, auto-enrolment should be improved to include all workers, irrespective of income, by removing the earnings threshold and lower earnings limit.
Moreover, the government should outline a timetable for increasing statutory minimum employer contributions from the current 3% to ensure all workers receive decent contributions.
Lastly, the introduction of funded, high-quality childcare accessible to all and free of charge is crucial, as caring responsibilities significantly impact women's ability to build up pension savings.
The TUC's findings highlight the urgent need for government intervention to address the gender pension gap and prevent a future generation of retired women from facing poverty. By implementing the recommended measures, the government can take decisive steps toward closing the gap and ensuring that all women have access to a decent income in retirement
