Despite recent attention in the media, progress in closing the gender pension gap in most countries has halted. These sources point to a stark disparity in retirement outcomes, with women receiving pensions that are between 25% to 30% lower than those of men. Methodological differences to estimate the gap don’t make it less striking and are no excuse for inaction.
Why does the gender pension gap exist?
The biggest driver of the gap stems from the fact that women are less likely to be in wage employment or work full-time in formal and informal labor markets. They are also more likely to earn lower wages when they do. Unpaid care work and household chores limit their potential access to economic opportunities and result in more frequent and longer breaks in employment, reducing pension contributions and accrual of benefits.
Implementing adequately long and paid parental leave, can improve their employment outcomes. According to World Bank’s Women, Business and the Law, the most persistent gender gaps are in the laws pertaining to women’s employment during pregnancy and after having children. Evidence from Mexico and Uruguay show that earnings-related contributory pensions are closely tied to the socio-economic circumstances experienced during active years. The pension gap is fully intertwined with the gender pay gap, the motherhood pay gap, and the jobs gap.
How to address the gap
Addressing gender inequality in pension systems requires a multi-faceted approach, including pay equity, reducing constrains to access economic opportunities for women, and addressing social norms. Absent progress in those structural challenges, gender-informed pension systems reform can help reduce this gap. Pension systems can be adjusted with equal retirement ages for men and women, reduced vesting periods for women, greater redistribution within the pension system, wider coverage through non-contributory pensions, automatic indexation of pensions to inflation, and better designed survivor pensions:
Reducing gender gaps in pension systems requires comprehensive and integrated policies and action with Ministries of Labor, Finance, and Social Welfare working together alongside social security and pension authorities, private sector financial institutions, civil society organizations, and international organizations and academia. It is not only the right thing to do, but also an economic imperative.
The World Bank’s Pensions and Social Insurance Global Solutions Group, a joint team of both the Social Protection & Jobs and the Finance & Markets Global Practice, is focused on analysis and reform of pension schemes around the world, including supporting countries in addressing the gender pension gap through technical assistance and country-specific projects. The World Bank’s ASPIRE database has been recently expanded to include gender disaggregated data on performance statistics of contributory pension programs, which further facilitates the organization’s ability to advocate for evidence-based pension policy formulation that contributes to closing the gender pension gap.
Thank you for choosing to be part of the Jobs and Development community!
Your subscription is now active. The latest blog posts and blog-related announcements will be delivered directly to your email inbox. You may unsubscribe at any time.
Social Protection Specialist, World Bank
Practice Manager, Social Protection and Jobs, World Bank
Lead Economist and Global Pensions Lead, Task Team Leader, World Bank
