UP would bring gains for women and would eventually be simpler to understand and to operate.But there are two problems for women:In 2015, about half of women will not qualify for the full amount; And because this amount is barely above the threshold, they will be subject to means testing. So the UP needs to be set higher than proposed2. The UP brings an awkward trade off for womenThere will be no alternative to private pensions for obtaining an adequate Wage Replacement Rate at retirement. But we know that women, if they have caring responsibilities, are less able than men to build up private pension entitlements.
We could add that Mum cant make enough money to pay off her student debt, pay the rent/mortgage and at the same time pay into a private pension scheme. But lets look at research that quantifies the impact of motherhood on employment and pensions
Ginn and Arber 2000 and 2001.Here we compare men and women in different ethnic groupsFor working age, FT empt and private pension contributions For those aged 60+, receipt of private pensionsClearly minority ethnic groups are disadvantaged relative to white, with extremely low likelihood of private pensions for Pakistani men and women. Bangladeshis are even worse off. Muslims are supposed to avoid financial products that rely on the stock market and Islamic pensions are rare.Although the gender gap exists in each group, it varies in size. So ethnic minorities, as well as women, will struggle to obtain a decent wage replacement, in the absence of any state earnings related pension.
The government says it will not apply the UP to pensioners. But there are compelling reasons, if we as a society care about justice, to include pensioners.Older women are one of the poorest groups in the population, second only to lone mothers. UP applied universally would increase older women’s income and lift them out of means testing.Women in the pensioner generation were not expected to be financially independent – they lacked many of the equalities that we take for granted now, in empt and in state pensions. So they had short employment histories, unless unmarried and childless.
The result of past gender discrimination can be seen in older women’s much lower personal income than men (57% on average) and higher poverty rate. Lifetime earnings one quarter of men’s (cohort born 1932-47). Only one fifth of older women have full BSP, 92% of older men.Among lone pensioners, women are nearly twice as likely as men to require means tested benefitsNone of this is inevitable. If other countries can provide a citizens pension to older people, eg NL, New Zealand, why not Britain?A UP for all would help to put right the historic injustices that this generation of women experienced.
Can we afford to provide a decent income for older people? The cost is estimated as between £3-6bn pa.That’s a large amount. But it could be found, given the political will.Within the pension system, this amount could be raised by abolishing the UEL or limiting tax relief on private pensions contributions to 20%.Both of these would entail redistributing from men to women and from non-carers to carers.When the contracted out rebate ends, the Treasury will gain an extra 8bn pa.Other large sums that could be saved outside the pension system are shown here, to put the cost of a UP for pensioners in context. Sources; various academic economists and tax experts. Approximate figures.Also a more progressive Council Tax, related to size of home; NIF has balance of £39bn this year. £20bn worth of benefits unclaimed each year
For younger women a single tier pension would help vulnerable groups.But its still a meagre pension, way below the international poverty level, and is not a panaceaThe downside is that without a state earnings related pension, private pensions will place a penalty on carers and some ethnic minoritiesOlder women, because of historic gender discrimination in the labour market and pension system, have an even greater need than young women for a single tier Citizens Pension.A Universal Pension is affordable for all ages, if there is the political will to redistribute from top earners
Jay Ginn Presentation for Age UK
State Pension Reform Proposals Will they help the vulnerable? Jay Ginn Visiting Professor Institute of Gerontology Department of Social Science, Health and Medicine King’s College, London
Pension reforms proposals– working ageWhich are the ‘vulnerable’ groups?• most women, especially lone mothers• most ethnic minorities• the low paid• those with insecure jobs(Among pensioners, older women living alone)
Pension reform proposals - working age Universal Pension (UP)Pro: Independent state pension above GC – a gain for most women No contracting out of UP scheme - simpler to understand Simpler and cheaper to operate, once transition is completeCon: Amount is close to GC level so 40% still eligible for means tested benefits Long transition while SERPS/S2P remain – complexity for many years Wage replacement only through private pensions - a loss for women
Mothers’ dilemma– to provide care or maximise earnings and pensions
Women aged 20-59, mid-skilled 100 % em ployed full tim e % w ith private pension 80 60% 40 20 0 N ev child , <3 5 C hild 0 - 4 C hild 5- 9 C hild 10 - 15 C hild 16 +Ginn and Arber 2002 Lifecourse stage
Ethnicity and Gender Interact Full time employment and private pensions White men Women Indian men Women Black men Women Empld FT 20-59Pakistani men Privpen 20-59 Women Privpen 60+ 0 10 20 30 40 50 60 70
Should current pensioners get the UP?Most existing pensioners reached adulthood between 1938-63Women’s opportunities to build good career + pension were limited:• Expected ‘homemaker career’ , financial dependence on husband• Expected to pay ‘small stamp’ NI – Married Women’s Exemption• Discrimination in employment, especially for married mothers• Lack of childcare facilities• Too late for 1960s university expansion and 1970s Equality legislation Past employment of cohort aged 72-89 (Sefton et al. 2011) FT yrs PT yrs Home yrs Yrs empld % empld of 40yAll women 14 8 18 22 55%Childless, never married 31 2 7 33 83%
Should current pensioners get the UP?Normative gender roles older women’s lower incomes WOMEN MEN• Means tested (65+): single/widowed 20% 12% divorced/sep 40% 23%• Full basic pension at SPA <20% 92%• Income below poverty level (65+) 33% 27% (Zaidi 2010)• Average personal income of all women 65+ - 57% of men’s• Lifetime earnings of previously married women - 25% of men’s (born1932-47, Bozio et al., 2011).• Other countries achieve lower poverty rates and greater income equality• UP would narrow the gender and ethnic gaps for current pensioners
Affordability of including current pensioners in UP Now UP UP for AllGovernment spend, state pensions/benefits , %GDP 5.7% 5.7% 5.9%Saving 0.2% GDP (£3-6bn?) in the pension system, annually:• Less spent on administration of means testing (cuts cost by 2/3)....... ..............................?• Abolish NI’s Upper Earnings Limit and include investment income ........................... £9bn• Abolish higher rate tax relief (40% rate)......................................................................... £7bn• When Contracted Out Rebate ends, Treasury will save ……………………………………£8bnOutside the pension system, annually:• Tax uncollected: Avoidance (£19bn); Evasion (£70bn) Lost (£11bn) ........................ £100bn• Robin Hood Tax on currency deals........................................................................... £4bn• 50% tax on income>£100,000pa raises £2.3bn. (Banks bonus pool = £4.3bn) ............. £2.3bn• Cut defence spending by half ..................................................................... £22bnOne off savings. Abandon HS2 (£32bn) Trident (£70bn). Correct tax credits (£9bn)
ConclusionsAdvances for women – in employment rights, pay, childcare and state pensionsBut those raising a family remain disadvantaged in employment and private pensionsFor younger women, a Universal Pension would reduce gender/ethnic gaps in state pensions, but it’s still a meagre pension and is not a panaceaThe downside is that without a state earnings related pension, private pensions will continue to place a penalty on carers and some ethnic minoritiesPensioner women have greater need for UP because of past discriminationUP is affordable for all ages, given redistribution from top earners