International Women’s Day asks us to imagine a world free of bias and look towards a more equitable future. Equal pay and financial prospects are integral to this but remain an area where women continue to struggle as they remain significantly lower paid than men.
This issue affects women throughout their working lives and leaves them retiring with a total pension income that is on average a whopping 37.9 per cent less than men. This is more than double the gender pay gap, which currently stands at around 15.5 per cent.
There are many reasons for this, and they run deep. Even the state pension, which forms the very backbone of people’s retirement, is not immune. Women on the basic state pension on average receive £145.87 per week compared to men receiving £172.64. It is also worth saying there are around 1.5mn women receiving less than £100 per week – more than three times the number of men in the same situation.
The enormous disparity comes from women being less likely to be in paid work and so they do not accumulate the national insurance credits needed to pay a full state pension. Many women under the basic state pension system will also have derived their state pension entitlement through their husband’s national insurance record rather than their own.
The situation is improving though, with women retiring under the new state pension system on average receiving £164.74 per week compared to £170.50 for men. Unlike the old state pension system women’s entitlement is based on their own national insurance record rather than that of their husband.
Pension credit
While the new state pension is more generous than the old one – at just over £9,000 per year – it still only covers the most basic of needs. While many women have other sources of income to draw on during retirement there will be many who do not, and they face a difficult time trying to make ends meet.
Pension credit is designed to help the poorest pensioners by boosting their income up to £177.10 per week if they are single or £270.30 if they are part of a couple. You may be entitled to more if you claim other benefits such as attendance allowance. Pension credit also acts as a gateway to other benefits such as help with bills and NHS costs, and the over 75s can also claim a free TV licence. It is a valuable benefit that can boost income by thousands of pounds over the course of a retirement.
Despite this, pension credit remains a hugely under-claimed benefit with recent figures showing only 66 per cent of those who are entitled to claim are doing so. This equates to roughly 850,000 households who are missing out on as much as £1,900 per year. This is an enormous amount of money that could significantly improve the standard of living for many pensioners, particularly in the current times where heating bills are spiralling and food prices are also rising strongly.
The Department for Work and Pensions launched an awareness campaign in late 2019/early 2020 aimed at boosting take-up. This was primarily through adverts in doctors’ surgeries and Post Offices. However, the pandemic will have hampered the success of these efforts and more needs to be done to boost awareness.
