Gender Pension Gap

David Linden Excerpts

Monday 19th April 2021 Commons Chamber

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

I am delighted to have secured this important debate on the gender pension gap, which stands at a shameful 40.3%—more than double the gender pay gap of 17.3%. That is truly shocking, and I hope that the debate will both highlight this terrible inequality and perhaps persuade the UK Government to take some fairly straightforward measures to address it if they are truly committed to pension justice and equality.

We are all aware of the justifications for women’s state pension age being raised, but equalising state pension ages is very different from pension equality. We could simply throw our hands in the air and exclaim that women have always had lower pensions than men, and that is just the way it is, but it need not be this way. It is simply unacceptable that all types of pension provision—whether state pensions, workplace pensions or private pensions—inherently discriminate against women. If they choose to do so, the UK Government could tackle this and thereby tackle the poverty that too many women face in old age. This can wait no longer, as an increasing proportion of women are simply not able to rely on their partner’s income in retirement, and nor should they be required to.

[David Linden (Glasgow East) (SNP)]

I congratulate my hon. Friend most sincerely on securing the debate. The average woman in her 20s in the UK will have to work almost 40 years longer than her male counterpart to build up the same pension. Indeed, a female saver can expect to have £100,000 less in retirement savings thanks to time taken out of the workplace to raise children. In the previous debate, the Government spoke an awful lot about levelling up. Does she agree that, if the Government are serious about levelling up, the first thing they could do is tackle the injustice of the gender pension gap?

[Patricia Gibson]

Absolutely. I know that the Minister will be listening intently, and I hope he will take away the reasonable and straightforward suggestions that I will make this evening, so that we can truly level up in the way that the Government say they want to.

Women born in the 1950s—WASPI women, or Women Against State Pension Inequality—have suffered hugely as their state pension age was accelerated, giving them insufficient time to prepare for retirement. Despite the clamour of outrage, the Government have refused to do anything to address the hardship caused to the women affected. I wish I could say that that policy decision was the only one that targets women in retirement. I wish this was the only measure I could find that has transformed retirement into a time of financial uncertainty and fiscal pressure for women. Sadly, it is a mere continuation of policy choices that have contributed to—indeed, exacerbated—the gender pension gap under which too many women now labour.

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[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

It is my mission as pensions Minister to make the UK pensions system safer, better and greener. We are doing that in a variety of ways, ranging from our world-leading climate change and environmental, social and governance reforms, which positively impact pension investments, to taking tough action on scams and unscrupulous bosses, and through our work to make pensions simpler and more easily understood with dashboards, and to tackle inequality.

I congratulate the hon. Member for North Ayrshire and Arran (Patricia Gibson) on securing this important debate. This Government, like previous Governments, recognise that this is an important issue—one that we remain committed to addressing. It is one of the key drivers of the automatic enrolment reforms and the 2016 new state pension reforms, both of which help to address the issue raised. Through automatic enrolment and the new state pension, we are enabling more women to build up pension provision in their own right, reducing historical inequalities in the pension system.

With respect to the hon. Lady, I submit that automatic enrolment has been a genuine game changer in workplace savings. It has happened over the past nine years, but the work has been done by successive Governments, including a Labour Government, who set up the Turner commission. Automatic enrolment was commenced by the coalition Government in 2012, before the original blueprint was fully rolled out by this Conservative Government in 2018-19. Savings of 8% are now the norm, and 10.5 million employees have been automatically enrolled by more than 1 million employers.

Overall workplace pension participation for eligible employees has increased by 44 percentage points since 2012, reaching 86% in 2019. It has been especially transformative for women, low earners and young people, who have historically been poorly served by or excluded from workplace pensions. The proportion of women participating in a workplace pension reached 86% in 2019, which is double what it was in 2012. Some 79% of low earners now save into a workplace pension, which is more than double what it was in 2012. Finally, 85% of young people now save into a workplace pension, which, again, is well over double what it was in 2012.

[David Linden]

I do not think anybody in this House would quibble with the fact that automatic enrolment has been a success story, but the point outlined by my hon. Friend the Member for North Ayrshire and Arran is that the £10,000 trigger in place discriminates against women. Why do the Government have such an objection to making sure that the trigger kicks in at the first pound, rather than waiting until £10,000, which is so disadvantageous to women?

[Guy Opperman]

I am grateful to the hon. Gentleman for raising that point, because I am coming to that specific issue. He will be aware that we conducted a review of automatic enrolment and that we are committed to implementing its findings by the mid-2020s. We intend to remove the lower earnings limit, which will benefit low earners, and for the first time everyone will get an employer contribution from their very first pound of earnings if they are enrolled or opt in. That will improve the incentive to save, especially for women and those individuals working part-time in multiple jobs. In addition, the review also proposed extending eligibility to those aged 18, which will support younger people with the opportunity to start saving earlier for a more secure retirement. Clearly, there is a benefit in the hon. Gentleman’s constituency. In the constituency of the hon. Member for Strangford (Jim Shannon), for example, 7,000 people are currently automatically enrolled, and thanks are due to the thousands of employers who are supporting them in that process.