MEPs reflect on the gender pension gap and how to close it

The research project ‘Mind the Gap in Pensions in Europe’ (MIGAPE) presented its results in an online meeting with Members of the European Parliament on 28 June 2021. The project highlighted for the first time possible projections of the gap between men’s and women’s pensions over the longer term in different EU countries. The Gender Pension Gap stands at 27% currently in the EU.

Gijs Dekkers of the Belgian Federal Bureau of the Plan presented its main outcomes: While member States such as Belgium and Luxembourg have very high pension gaps, this is currently very low in Slovenia. An explanation can be found in the more egalitarian distribution of part-time work between women and men in Slovenia, a heritage from an equal work culture established before the transition to democracy. In Belgium and Luxembourg, in turn, gender gaps stem from the much higher share women spend caring for children and other relatives by reducing their working hours. However, in a longer-term projection, closing the part-time gap in Belgium and Luxembourg will reduce (and in the case of Luxembourg even reverse) the gender pension gap. In Slovenia, however, it is expected that women will increase their share of part-time employment, leading to a widening of the gap.

The project results also underscore the importance of compensatory mechanisms in reducing the gender pension gap, such as pension credits granted for care leaves. A part of the study showed also that better information about how career and care choices influence pensions risk having only a limited effect, as the broad impacts are known to women and men, but more women tend to make their choices in the interest of the family, knowing this will impact them negatively. The work-life balance directive risks not fundamentally changing pension outcomes as well, as the bulk of the gender pension gap stems from longer-term part-time employment rather than shorter-term career breaks around the time of childbirth.

Maciej Kucharczyk, Secretary-General of AGE Platform Europe, conveyed AGE’s concern about rising poverty and social exclusion rates among all pensioners, but among women over 75 particularly. While the gender pension gap is on a downward trend, this trend is extremely slow and additional action needs to be taken to make gender equality a reality for current pensioners and not only for future ones. At the same time, the COVID-19 pandemic has brought an increase of informal care work, performed in majority by women and grinding to a halt progress towards gender equality. A shift to supplementary pensions (second-pillar and third-pillar) is not necessarily a solution either, as these tend to amplify gender inequalities in employment patterns. Projects such as MIGAPE should be expanded to more member states.

Manuel Pizzarro, member of the European Parliament
Manuel Pizzarro, member of the European Parliament

Manuel Pizarro, Member of the European Parliament (S&D, Italy), was concerned that the gender pension gap is an issue in all European member States, although there are some differences. It has reduced from 40% in 2010 to 27% in 2020, which is an important achievement, but poverty and social exclusion rates among pensioners have risen at the same time. The gender pay gap is an important lever to close the gender pension gap, and the Commission’s current proposal will help in this regard, as it includes binding transparency requirements on wage gaps in pay reports. Unpaid care work has to be included in the calculations of pensions of women and men; this is a central demand of the S&D group since 2015.

Mr Dekkers responded that changes in the labour market, while they are important, are only linked to changes in pension outcomes decades later, as pensions are very slow vehicles to change course, similar to oil tankers.

Ettore Marchetti, European Commission
Ettore Marchetti, European Commission

Mr Ettore Marchetti of the European Commission’s Directorate-General for Employment and Social Affairs conveyed the Commission’s concern about the gender pension gap. He underlined it is not mainly created by pension rules, but rather by labour market biographies. Women are higher achievers in education and much less frequently leave school early: they are not doing anything ‘wrong’, but something happens to them between labour market entry and exit. The choices on unpaid care are constrained for women, depending on culture and availability of childcare. The Commission cannot trigger cultural change but continue to spell out the costs of care gaps for the economy and the society. The persistence of the gender pension gap is not only about a loss of GDP or talent, but also about poverty. Particularly the rise of single-parent families, mainly headed by women, but also the rise of the number of older women living alone is a strong component of old-age female poverty. Some achievements in the reduction of poverty and social exclusion have been registered over the past decade, and a new target aims for reducing it by 2030. The rising number of older persons, and of older women in particular, means that these targets will be difficult to attain if old-age poverty is not addressed.

Milan Brglez, Member of the European Parliament
Milan Brglez, Member of the European Parliament

Milan Brglez, Member of the European Parliament (S&D, Slovenia) noted that ageing is often shown as a projection between persons of working age and persons of pension age, a portrayal which often aliments discourses about conflicts between generations. The MIGAPE project underlines the important factors that underpin the gender pension gap and confirms that gender equality must be at the heart of responses to demographic change. The Slovenian gender pension gap is projected to remain below the EU level average, but the project shows that this cannot be taken for granted. Policies must prevent future gender inequalities and widening the pension gaps.

Participants concluded that more research actions such as MIGAPE must be undertaken to fully know the future evolution and the levers of the gender pension gap and thereby contribute to closing it.

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