''Rotten Pensions'' for Women – Impact of an Ageing Workforce

Disparities of gender equality become exaggerated with age, pensions are affected by this and employers need to be aware that this should be a consideration when helping their older workforce plan for retirement.

Rachael Saunders,  Head of Communications




Rachael Saunders Head of Communications

Recently, the government’s pensions minister, Steve Webb, admitted that women will get "rotten pensions" for “some years”.  Current pension reforms are designed to even out payments for men and women, but due to the accumulated pensions deficit, coupled with an ageing working population - it will take a long time to work through the system.

These “rotten pensions” are a red flag that go beyond just pension provision to encompass the impact of an ageing population.  This is absolutely something employers must consider when helping their older workforce plan for retirement, particularly if the individual has had a career break or works/worked part-time.

What also must be kept front of mind is an increasing body of research that suggests the disparities of gender equality become exaggerated with age.  The disparity in advancement in the workplace between men and women increases with age. As male workers grow older they are more likely to make it into managerial positions, which is less true of older women workers, many of whom lacked access to skills and education when younger and/or will have had a career break at some point. 

Given that by 2035, 23% of the population is projected to be aged 65 and over compared to 18% aged under 16, employers are looking at managing a workforce that is largely populated by economically active older people. Women aged 60-64 are the fastest growing group of economically active older people and their participation in the labour market has been rising steeply since the mid-nineties.

To put some context around what the impact ageing workforce looks like for women:

  • A study by the London School of Economics found that at age twenty, the same percentage of men and women were in management positions, at 5%. However, by age 45, this had risen to around 23% for men, but just 11% for women.
  • The gender pay gap increases with age. At age 40, the full-time pay gap between men and women in the UK is 27%, compared with an overall hourly full-time gap of 15.5% for employees of all ages.

The failure to progress older women to management levels in the same numbers as men is one factor behind the age and gender pay gap, as is the concentration of men and women into different occupational roles and different sectors.

Add to this outlook, the default retirement age came to an end in October 2011 in order to allow people to work as long as they want to do so. It is important for employers managing a multi-generational workforce to develop a clear understanding of the issues associated with advancing older women in our workplaces, within which pension disparities would sit.

Below are some top line actions that employers can use to kick-start this process, and a full list of recommendations for employers committed to ensuring older women in their workplace are not discriminated against can be found in our Food for Thought: Women and Age factsheet.

Actions for employers managing an ageing workforce: 

  • Specifically monitor the pay and progression of older women workers. This data is crucial if employers are to adequately identify any causes for concern.
  • Reframe their policies and procedures regarding the end of an employees working life following on from the removal of the default retirement age. With the onus now on the employee to decide when it is right for them to exit from the labour market, line managers may benefit from training to appropriately support and advance an older workforce.
  • Harness the potential older workers. Older workers bring a wealth of life and employment experience which can enhance an organisation’s productivity. Are recruitment policies and processes and the broader business case acknowledging, rather than ignoring, this demographic?
  •  Organisations should be conscious that older women are less likely to make it to managerial positions, and should consider what actions they can take to correct this. Inclusive leadership practices and unconscious bias training can help businesses minimise the impact of indirect discrimination.
  • The older women’s pay gap is far too high. Employers can reduce their gender pay gaps by conducting regular pay audits and creating a culture of transparency around pay. Disaggregating pay information by both gender and age is essential to see a clear picture of how inclusive your reward scheme is.
  • Agile working has numerous organisational benefits and can be a particularly attractive option maximising the contributions of those at the later end of their working lives. It is particularly helpful in retaining valued employees who are care-givers. Opportunity Now asks members to commit to offering flexible working options to all employees; embed agile working practices at all levels in your organisation, including leadership and management roles; and monitor the pay and progression of those taking up flexible working patterns, taking action to address any anomalies. 

Read The Telegraph article:
Women 'will get rotten pensions for years to come', says minister