Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698058786366.pdf (Liberia)
Gender inequality in old-age and disability pensions – exploring drivers and solutions Shea McClanahan 12 November 2019 Key messages and structure Key messages: • Poverty in retirement and during periods of disability is particularly an issue for women.

• Pension systems can and, in many cases do, improve the situation.

• But recent pension reforms and changes in the external environment mean the situation is deteriorating for women in many countries.
• Social security can play a leading role to ensure that women are better off.

Structure 1.

Gender outcomes in pensions 2.

Key drivers of gender inequality 3.


Policy and administrative solutions to address gender inequality Development Pathways 1 Gender outcomes in pensions Development Pathways 2 Overall, pension systems reduce inequality Inequality of income distribution – Income quintile ratio (S80/S20), by age group (2016) • Pension and tax systems are important in reducing income inequalities among the elderly in all EU countries.

• Income inequality is lower among those over 65 in almost all EU countries.
Source: Eurostat/Council of Europe (2018).

Development Pathways 3 Old age poverty declining but persists and is worse for women • Older people are less at risk of poverty or social exclusion than a decade ago, largely thanks to public pensions • But, women over 65 still face a much higher risk than men of poverty or social exclusion.

• And the risks increase among older cohorts.

At risk of poverty or social exclusion (AROPE) by age and sex in the EU (2008-2016) Source: Eurostat/Council of Europe (2018).
Development Pathways 4 Women and disability pensions The disability and poverty cycle • Disability and poverty are mutually reinforcing • Women who are disabled are particularly vulnerable • Globally, men with disabilities are twice as likely as women with disabilities to be employed (ILO), affecting women’s ability to generate own entitlements • Women are at higher risk of both sickness absence and receiving a disability pension Source: Based on Banks and Polack (2014 Development Pathways 5 And, the gender gap in pensions persists Gender gap in old-age pensions (pensioners 65-79, 2009 and 2016), % On average, the gender gap in pensions across the EU is 37%.
This is down from 41% but still significant.

Women are still over-represented in minimum pensions in most high-income countries.
Development Pathways 6 Drivers of gender inequality in pensions Development Pathways 7 Drivers of gender inequality in pensions • Labour markets • Shorter careers (start late, leave early) and frequent breaks • Lower salaries and slower earnings progression • Occupational segregation • Life course • Longer lives • (Unpaid) care responsibilities and work-life balance • For disability: e.g.
higher burden of musculoskeletal pain and higher prevalence of common mental disorders • Pension design • Social insurance plans still depend heavily on work history • DC plans with tight link between contributions and benefits disadvantage women Development Pathways 8 Labour market inequalities – lower participation and pay Women still less likely than men to participate in the labour market and pay a heavy ‘marriage penalty’.
LFPR (age 25-54) by sex and marital status, Western Europe and North America Gender pay gap persists, even in the best performing regions!

More likely to work in lower paying jobs and part-time (32% of women v. 7% men in EU!).
Married men Married women Source: UN Women (2019) Source: OECD and Nordic Council (2016) Development Pathways 9 Motherhood penalty is highest in high-income countries Women with children under 6 are 8% less likely to be in the labour force than those without children in high-income countries, while men get a labour force ‘boost’ from having small children.

This contributes to lower lifetime earnings for women.
Impact of the presence of children under 6 in HH on LFPR, by sex and region Unpaid care work – Women spend around double the time on unpaid care work as men.

Source: UN Women (2019).

Development Pathways 10 Life course – women live longer Longer lives translate into lower average pensions for women.

In OECD, women’s life expectancy at retirement is 86.1 years, compared to 83 years for men.
But women are also more likely to leave the labour market earlier (at age 63.6 compared to age 65.1 for men - OECD).

Average years in retirement, OECD countries, 1970-2015 Development Pathways 11 Explaining the gender gap in pensions Supplementary pensions entrench gender inequality where they exist.

Gender gaps in social insurance pensions are driven by length of working life.

Source: SAAGE (2018) cited in Council of Europe (2018).
Development Pathways 12 Recent reforms and impacts on adequacy Development Pathways 13 Changes in eligibility requirements 1.

Increase in service requirements for minimum (contributory) pensions.

• More than two thirds of OECD require at least 35 years; increased in France, Spain, the Netherlands • Women still make up disproportionate share of minimum pension beneficiaries in Europe, although declining in many countries.

2.

Increasing retirement ages a double-edged sword.


• Equalizing retirement ages for women and men can improve pension adequacy esp in funded schemes BUT improvements in women’s LFPR close to retirement must follow Development Pathways 14 Introduction of defined contribution schemes • Defined contribution schemes disadvantage women.
• Tighter link between contributions and benefit levels exacerbates impacts of shorter working lives • Career breaks earlier in working life lead to lower pensions due to shorter investment return/indexation periods • In many places, conversion rates are based on gender, resulting in lower annuity payouts for women with higher life expectancy • Women more risk averse – safer investments translate into lower pensions DC reforms since the 80s and 90s have not delivered on their promises • Of the 30 countries in Eastern Europe and Latin America that privatised their national pension systems, 18 have re- reformed or reversed the privatizations and re-instated mandatory defined benefit public social insurance models • Why?
They didn’t deliver on promises of high investment returns, adequate benefits, deeper capital markets or increased coverage.

Gender inequality increased significantly.

• And - no high-income, democratic country privatized their public pensions but instead opted for ‘parametric’ reforms (e.g.

raising the retirement age or adjusting benefit levels), because well-designed DB schemes are popular.

• See Ortiz, et al.

(2018) for the full story.


Pension design – focus on second pillar Coverage and gender gap in public and supplementary pensions Source: Council of Europe (2018) Split of pension assets by type of private pension plan Source: OECD (2016) Coverage of supplementary pensions varies widely and is generally low.

Women are under- represented in occupational and private pensions overall.
In places where the second pillar is primarily defined contribution, women are under- represented and disadvantaged.

Development Pathways 16 Other changes (survivor pensions and indexation) • Cutback in dependent spousal benefits has complex gender implications.

• E.g.
Sweden removed survivor benefits for over 65s under NDC and replaced with reduced flat-rate guarantee spouse’s pension that tapers with earnings-related entitlements • A move to individual entitlements is positive for women if it reflects a move toward more equal sharing of family responsibilities, and is positive for single women • But reforms cannot outpace social and labour market changes where women have not accumulated sufficient individual entitlement and requires a strong and effective minimum pension • Reduction in pension increases • Between 2009-2015, 16 of EU 28 either froze or reduced indexation, which affects women more (longer lives, heavier reliance on 1st pillar).
Development Pathways 17 Solutions Development Pathways 18 1.
Policy Measures (pension system) • Equalising retirement ages • But employment market needs to follow • Ex gratia payments for older pensioners and benefits in kind • Caregiver credits – credit for periods spent outside paid employment for “social reasons” • But need to recognise all caregiving • Career average salary schemes • Reducing minimum service requirements / strengthening minimum pensions • Flexible contribution design • Strengthening entitlements to non-contributory pensions (and more generous benefits for single pensioners) • Unisex annuities – already required in Europe • Second pillar measures – e.g.
Compulsion/quasi- mandatory 19 Example: Norway – cumulative effect of policy measures All of these policies work together.

Example of Norway shows the estimated size of the impacts of different policy measures in closing the gender gap.

Source: Hansen (2018).

“Gender Issues and Redistributive Mechanisms in the Norwegian Pension System.” Presentation at ISSA Technical Seminar, Reykjavik, May 2018.
Development Pathways 20 2: ‘Proxy’ Measures – employment policies most powerful lever • Recognition of non-paid work • Public provision/subsidisation of childcare • Care of elderly relatives knock on positive effects of formal recognition • Paid parental leave policies, especially shared (and non-transferabe) leave • Increasing participation rates for older women • Facilitating flexible/predictable working hours • Improving coverage and adequacy in sectors where female workers are over represented • Improving salary levels of female workers (e.g.
equal pay legislation) • Progressive taxation (no income tax on low- income pensioners) Source: Nordic Council (2018).

21 3: Administrative measures • Access to benefit information • Affiliation and contribution payment procedures • Increase channels • Claiming benefits • Reduce documentation required • Payment of benefits • Improve coordination with other agencies (e.g.

tax) 22 Key takeaways • Gender inequality in pensions persists and is driven by much more than the wage gap.
• Reforms in the pension system can and do help, but care must be taken to ensure that they do not outpace social and economic realities.

• The most effective ways to close the gender pensions gaps begin in the labour market and the work-family nexus.

Development Pathways 23 Thank you!

Þakka þér fyrir!
Development Pathways 24 Links to reports referred to in the presentation of Shea McClanahan https://www.unwomen.org/-/media/headquarters/attachments/sections/library/publications/2019/progress-of-the-worlds-women-2019-2020-en.pdf?la=en&vs=3512 https://ec.europa.eu/social/main.jsp?catId=738&langId=en&pubId=8084&furtherPubs=yes https://www.oecd-ilibrary.org/social-issues-migration-health/pensions-at-a-glance-2019_b6d3dcfc-en http://norden.diva-portal.org/smash/get/diva2:1240031/FULLTEXT01.pdf Development Pathways 25