Mind the Gap – The Gender Pension Gap in Ireland
As they near retirement, many women in Ireland face a harsh reality that their pensions are significantly lower than those of men. Miriam Burke, Head of Member Engagement at Unio Employee Benefits explores the gender pension gap, looking at causes and approaches to addressing the shortfall.
The 2024 Gender Pension parity Gap Report from Irish Life clearly highlights the pension inequality faced by working women, finding a worrying 36% gender pension gap(1). This gender pension gap, driven by factors such as parental leave, career breaks for caregiving, part-time work and lower lifetime earnings, highlights ongoing inequalities that jeopardise the financial security of Irish women.
In my job, I meet and advise hundreds of men and women every year at different stages in their retirement cycle and get to see this ‘gap’ at first hand. It’s a fact that women’s pension pots are lower than their male counterparts and while thankfully over the last few years the gender pay gap is getting less, and women are more aware, and paying into their pensions earlier, their ‘pension pots’ continue to be lower. The report finds that women in this country would need to work a staggering eight years longer to retire with the same pension pot as men (1). I think we could do better.
Why the gap?
Anyone can end up having a gap in their pension, due to parental leave, maternity or paternity leave, or caring for a family member, however, the implication of taking time out from paying pension contributions needs to be considered carefully, as these breaks can severely impact pension income.
Though both women and men take time out from the workforce, on average European women spend 4.3 years less in paid employment than men, though in Ireland, that gap is wider at six years(2).
Another driver of the pension gap is the perennial issue of the pay gap. The overall EU gender earnings gap is 36.2 %(2). The Irish Life report found that women’s salaries are, on average, 22% less than their male colleagues.
The ‘glass ceiling’ too remains a factor. The position in the hierarchy influences the level of pay and less than one in ten of top companies’ CEOs are women (3).
On a positive note, I believe that the new generation of women coming into the workplace are generally more confident, finance-savvy and very focused on their pensions however, the pressure seems to be on women to educate themselves, and demand pay transparency and equal rewards.
Bridging the gap
The gender pension gap issue is complex, and a multi-faceted approach is needed.
Solutions such as pension contributions for caregivers and promoting equal pay are obvious and important steps forward. Visibility of women in senior roles will help as will reporting salary ranges to understand gender representation in the workforce.
There is a mechanism that allows employers to increase contributions for individuals on their return from unpaid leave, but it is not widely availed off. Similarly, employees could increase their AVCs at any time on their return to make up for lost contributions however this may not be affordable. An approach where employers pay pension contributions when employees are on maternity or paternity leave is what is needed.
Pensions are complex and information is power. Employers and their pension providers need to engage frequently with employees to make sure they understand their options when it comes to their pension arrangements and the implications of any leave entitlements.
At Unio Employee Benefits, we are happy to work with our clients to help provide solutions to help bridge these potential gaps for their scheme members. Contact your client manager directly or get in touch at enquiries@unio.ie
References:
- Gender Pension Parity Report, Irish Life, 2024
- Duration of Working Life, Eurostat, 2023
- The Gender Pay Gap Situation in the EU, Eurostat 2022