Expert Pensions

The Pension Gender Gap

Irish men can look forward to a far more comfortable retirement than women, according to the latest statistics. On average, male OAPs (Old Age Pension) are a massive 37% better off than their female counterparts, an EU-wide study revealed.

At the same time, women live on average three years longer than men — so actually need MORE money in their pension pot to balance this out.

Historic Causes

Generations of women who worked in the Irish Civil Service were forced to quit their job following their wedding. The so called “marriage bar”, which also extended to many private sector companies, was lifted for teachers in 1953 but remained in place for the rest of the public sector until 1973. Today, many thousands of older Irish women affected by the marriage bar are only entitled to a basic State pension because they lost out on decades of potential earnings and contributions.

Time Out From Workforce

Only 10 per cent of organisations offer flexible pension schemes that allow for gaps in a person’s working life. Most are predicated on 30 to 40 years of uninterrupted service.

This is good for men, but not for women — many of whom take time out from full-time employment to raise children or look after elderly relatives.

The Centre for Work-Life Policy estimates that taking one to two years out of the workforce can decrease earnings potential by 14% with earning power slashed by almost 50% if you are out of work for over three years.

Paying The Part-Time Penalty

Women account for a massive 70% of part-time workers in Ireland. Reduced working hours not only affect your pension contributions but also have a negative impact on the growth that would have accumulated in your pension fund over the years, had you been paying higher premiums.

Worse Wages

Even when they work full-time, women also earn less than men (our gender pay gap is 13.9% according to the most recent survey). With less money coming in, the cost of basic necessities eats into the wages of women more than men, affecting their ability to invest more money in their pensions. Over a quarter (27%) of women do not regularly set money aside for their retirement, compared to just 18% of men.

Current Situation

Ireland is not just facing a pension payment gender gap; both sexes also differ in their approach to retirement. A 2017 Iposos Mori poll found that just 8% of women are planning to have an adequate level of income during retirement, compared to 22% of men. And a 2018 study found that just over one in three Irish women own a pension (36%) compared with 55% of men. Little wonder then that 5% of women work full-time in retirement to boost their income, compared to just 1% of men.

What should women do?

Consider taking out a private pension — this can provide the flexibility that many women need throughout their lives. A 30-year-old woman could accumulate a pension of more than €300,000 across 35 years for the price of a cappuccino a day.

When you are applying for jobs, take into consideration the firm’s occupational pension scheme. Will it allow for breaks in employment? Will your employer continue paying pension contributions during maternity leave?

Finally, if you’re a full-time homemaker, you could still be entitled to a contributory State pension.

This is because the Department of Social Protection’s ‘Homemakers Scheme’ allows up to 20 years of caring duties to be considered when a person’s social insurance record is being averaged for pension purposes. 

However, you still need to have made a certain number of PRSI contributions.  

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