Ireland’s population is growing and, as a nation, we are on average older. Between the 2016 and 2022 censuses, the population increased by 8 per cent through natural increase and net migration to 5.15 million people. The average age increased by one year and, with medical advances, average life expectancy has also increased.
That has implications for retirement. Women live longer than men and therefore have more retirement years to cover. But while the gender pay gap between men and women in Ireland correctly gets plenty of attention, the gender pension gap is much less appreciated, despite being significantly larger.
To more fully understand the true extent of the gender pensions gap, Irish Life recently undertook an in-depth analysis of the difference between the pension funds of working men and women based on a data set of 130,000 defined contribution plan members across the State. This analysis highlights the pension inequality experienced by working women in Ireland today.
It reveals a gender pension gap of 36 per cent. Put simply, women need to work eight years longer than men to achieve the same pension pot in retirement. This has potentially detrimental effects in later life and needs to be addressed by Government, by the pensions’ sector, by employers and by individuals.
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The age at which men and women start saving into a pension is the same, on average, the data shows, and both contribute comparable percentages of their salary. So, saving habits are not a factor influencing the gap.
The two primary contributing factors are salary disparity and time out of the workforce.
The analysis found a 22 per cent disparity in pay between men and women. For example, 9 per cent of men were on a salary of less than €30,000 while 18 per cent of women were under that threshold. At the other end of the spectrum, 15 per cent of men were on a salary in excess of €100,000 versus 9 per cent of women.
As pension contribution levels are determined by base salary, this means that women’s actual contributions, on average, are lower right throughout their careers.
Eurostat research has found that Irish women spend, on average, six years less in paid employment than men. This is mainly due to maternity leave and family caring responsibilities.
I’m not naive enough to think that pensions gender parity will be a burning issue on the doorsteps at the next general election. But women should be exercised by this
The combination of lower pay and less time in employment drives the gender pension gap and increases the risk of women experiencing poverty in their later years.
There is a once in a generation opportunity to address this gap. The Auto-Enrolment Retirement Savings System Act 2024, signed into law last week by President Michael D Higgins, is of huge importance and should have a far-reaching positive impact for Irish people. However, regrettably, it is a lost opportunity of significant proportion to gender-proof pension policy.
The Act’s digest, published recently by the Oireachtas, draws a comparison between the key recommendations emerging from pre-legislative scrutiny and the content of the Act.
The digest explicitly notes that recommendations for the provision of a State incentive for women during maternity leave and for a mechanism for a woman’s partner to make additional voluntary contributions during her maternity leave have been ignored. This much needed flexibility would have helped, in a material manner, to reduce the gender pensions gap.
I’m not naive enough to think that pensions gender parity will be a burning issue on the doorsteps at the next general election. But women should be exercised by this. It is very important for their financial wellbeing.
Pension providers must also play a role to make it easier for people to understand and become more engaged with their pensions. The reality is that too many people in their 20s, 30s and 40s have just a passive interest in their pensions.
Employers can also play a key role by reviewing workplace benefits and designing initiatives with their pension provider, to economically empower women colleagues.
For example, it is possible to address the gap at source by introducing pension specific workplace policies such as increasing employer contributions for women returning from maternity leave. We do this in our own occupational pension scheme at Irish Life to smooth out the gap in colleagues’ pension contributions and it is genuinely appreciated.
As a society, we cannot contemplate an outcome where this huge gap remains unaddressed. Ireland is a developed economy. We are technically at full employment. We have a host of global multinationals here and a vibrant domestic employer base. It behoves us to ensure that the material gender pension gap is reduced and ultimately closed
There are myriad areas where determined societal progress has been made in Ireland. There are other areas where work remains to be done. Closing the gender pensions gap is a mission critical task for today. Not for some time in the future.
Teresa Kelly-Oroz is group company secretary and head of public policy at Irish Life
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