DWP figures show drop in gender pension gapwritten by Bella Palmer
The new state pension system was introduced with no net overall cost and contains features designed to improve the relative position of women
New figures published by the Department for Work and Pensions (DWP) show a dramatic reduction in the gender pension gap between the old and new state pension systems.
For those who reached state pension age before 6th April 2016 and come under the ‘old’ state pension system, the average man is receiving nearly £164 per week and the average woman £136 per week, a gap of nearly £28 per week. But for those who come under the new state pension, the gap has fallen to around £7 per week - £160 for men vs. just under £153 for women.
The new state pension contains a number of features designed to improve the relative position of women.
The new system is based around a ‘flat rate’ whereas the old system has an earnings-related element (SERPS) which favoured those who earned more.
Additionally, the new system treats periods as a carer (such as bringing up children or caring for an elderly relative) more generously.
The new state pension system was introduced with no net overall cost which means that higher average pensions for women have in part been financed by lower average pensions for men.
LCP partner and former pensions minister, Steve Webb, said: Whilst any gender difference in pensions is unwelcome, it is very good to see that the 2016 reforms to the state pension are starting to make a real difference to women’s pensions.
The fall in the state pension gender gap from around £28 per week to around £7 per week is very striking, and reflects the way the new system was designed, Webb said.
He said, a year caring for a young child or an elderly relative now generates just as much state pension as a year running a FTSE 100 company, and this change has contributed significantly to reducing the gender pension gap.
This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.