Men state pension claimants £29,000 better off than women; new system reduces inequalities

Written by Talya Misiri
23/04/2018

Men in the UK are currently receiving £29,000 more than women, over the course of a 20-year retirement, Which? has highlighted.

According to the latest data from the Department for Work and Pensions, a significant gap remains between men and womens’ state pension income. The average man receives £153.86 a week and the average women receives £125.98 a week.

Nonetheless, the DWP confirmed to Which? that the new state pension arrangement is reducing inequalities in the gender gap.

In August 2017, the average payment received by women was 81.9 per cent of that received by men, up from 79.7 per cent in August 2015 and 77.7 per cent in August 2013.

A DWP spokesperson said: “Around 650,000 women reaching state pension age in the first 10 years will receive an average of £8 per week more (in 2015-16 earnings terms), due to the new state pension valuation of their National Insurance record.”

In many cases, research notes that women have a lower pension due to taking a break from their careers to raise children. Nonetheless, middle-to-high earning women who temporarily leave work to care for their children have also been reminded that it is necessary for those in this position to still claim child benefit in order to gain national insurance credit for their state pension.

While the gender gap remains, Which?’s research does note that the new state pension system has increased average weekly incomes. Those qualifying since the new system receive an average of £150.35 per week compared to £137.81 under the old one. This adds up to £13,041 over a 20-year retirement.

Nonetheless, only one in five recipients of the new state pension are women. The DWP explained that this is because “there is not an even spread of people reaching state pension age each month.

“The way that the equalisation of men’s and women’s state pension age has been phased has affected the dates when people reach their state pension age. Since April 2010, women’s state pension age has been gradually increasing to bring it into line with men’s,” the DWP said.

Commenting on the improving state pension gender gap Royal London director of policy Steve Webb added: “Although these figures show a continuing gap between men and women in terms of state pension outcomes, this is largely because men who have built up larger entitlements under the old rules are having them honoured in the transition to the new system.

“But there should be no doubt that the new state pension system has already reduced inequalities and will progressively bring male and female outcomes into line. Under the new rules someone earning £7,000 per year builds up the same state pension as someone earning £70,000, and someone at home bringing up a young child builds up as much state pension as someone running a FTSE 100 company.

“Reversing decades of inequality takes time, but the new system marks a major step forward,” Webb concluded.

Which? Money editor Harry Rose commented: “Our evidence shows how variable people’s state pension payments still are. Many pensioners will be shocked by the differences in average payouts to men and women and those qualifying under the old and new systems.

“Some pay gaps will close eventually, but not soon enough for some.”

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