It is a fact that there is a gender pay gap worldwide. But women also face a pension gap compared to men.
The reason for the gender pension gap is clear: less money earned, less contributed to the system, less pension earned.
Women get paid less than men
In the EU, the difference between average gross hourly earnings of male and female employees as a percentage of male gross earnings in 2020 was 13%, ranging from 0.7% in Luxembourg to 22.3% in Latvia. Malta’s gender pay gap was 10%, putting us in ninth place in terms of pay parity.
There are various reasons for this gap. In Malta it is twice as high for females in part-time employment as it is for those in full-time employment. The highest gap is in real estate (29.7%) while it is lowest in construction (3.2%).
At EU level, the European Commission has prioritised reducing the gender pay, earnings and pension gaps and thus fighting poverty among women. Malta is fully subscribed to this framework and is committed to further reducing this gap.
Some progress has been achieved thanks to the introduction of free childcare, the in-work benefit scheme and other measures, with positive implications for the pension benefits women will receive later in life.
In these last 10 years, the gender pay gap has been reduced to 10%, but official statistics still appear to indicate regress in the pension gender gap.
Women have lower pensions than men
Less well-known is the pension gulf between men and women. The average gender gap in benefits between men and women worldwide comes in close to 30%, the gap being defined as the difference between the average male pension and the average female pension, expressed as a percentage of the average male pension.
That gap at age 65 or over stood at around 27.5% in the EU in 2020, ranging between 1.1% in Estonia and 39.3% in Malta, being the highest in the Union.
It gets worse at ages between 65-74 and 65-79 years.
In general, employment-related considerations, system design and socio-cultural issues contribute to this disparity. The fact that women tend to have less linear career paths than men, work part-time at some point, have shorter careers due to child-raising and elder care, and retire earlier than men for a variety of reasons, all impact negatively their eligibility and credits in the retirement pension system.
Looking in more detail at the gap in Malta (retirement pension and survivors’ pension, excluding private pensions), the gap in 2022 was 18.2% in the 61-64 age bracket (2,220 females), worsened to 20.1% for those aged between 65-74 (13,130 females), and then improved to 10.2% in the age bracket 75-84 (5,870 females) and 85-94 (1,480 females, where it reached a low of 7.9%), but deteriorated slightly in the age bracket 95-104 (just 130 females) to 12.4%. The average weekly deficiency ranges between €8 and €20 weekly across the various wage brackets.
The continued narrowing of the gender pay gap through targeted measures will help- Mark Musu
Recent measures to address the pension gap include the gradual granting of the equivalent of the full retirement pension of the deceased spouse to those who receive a widows’ pension; contribution credits to women who stopped working because of parental reasons; the revision of certain pensions where there was still gender discrimination; and other measures targeted to help persons bridge gaps in their contributory record.
The apparent ‘regress’ is mainly due to the fact that in 2015, a new annual bonus started being paid to persons (mostly but not limited to married women) who have less than 10 years of social security contributions and hence were not eligible to a pension. Circa 14,000 women now get this retirement benefit, instead of getting nothing. But the statistical outcome is that it unfortunately results in a lower average pension overall which inflated the pension gender gap by circa 12 percentage points.
Another positive measure will have a similar statistical effect – that extending eligibility to a reduced minimum pension for persons (again mostly but not limited to married women) who worked before they were of age 19 or before January 1979 and paid at least 10 years of contributions.
Another 2,000 women are getting a relatively low pension, instead of getting nothing, but again perversely reducing the average pension paid to women.
Despite the perverse situation mentioned above, the gap improved slightly since 2018. Whatever the reason, the gender pension gap presents urgent challenges, with women facing their retirement years with fewer benefits and thus grave financial challenges. And since women, on average, live longer than men, this problem compounds over time.
What can we do about it?
The continued narrowing of the gender pay gap through targeted measures will help. Employers can implement more flexible workplaces and policies that will encourage more women to join and remain in the workforce. The pandemic has proven that alternative styles of working can thrive.
In recent years the government has made it possible for persons (mostly women) to make additional payments to reduce missing contributions in their contribution history.
The just-announced changes in parental leave for fathers could lessen the burden on women, typically the primary caregivers, although it could be argued more is required.
The government has also pledged to make the protection of pension rights a part of separation or divorce proceedings.
Mark Musu is permanent secretary, Ministry for Social Policy and Children’s Rights.
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