The Women’s Budget Group (WBG) has outlined a series of recommendations for the government and Pensions Commission to consider to help close the gender pensions gap.

In a policy briefing, the think tank highlighted the ways in which gender inequality was reinforced and worsened by the pensions system, and argued that pension inequality would be ‘baked in’ to all women’s futures without reform.

It described the pension system as dysfunctional and unfair, reflecting labour market inequalities, with further inequality built into the system as the highest earners can save the most, benefit the most from tax reliefs, and make the highest returns.

To help address the gender pensions gap, the WBG urged the Pensions Commission to consider altering the definitions of adequacy, and the methods used to model and evaluate women’s pension needs, to account for the impact of social care, health, housing tenure, unpaid care work, and the balance of state and private provision.

It called for consideration of the balance between state and private pensions, and between defined contribution (DC) and defined benefit pensions, as the gender gap was narrowest in state pensions and widest in DC pensions.

The Pension Commission was encouraged to set out the adequacy of the state pension for those solely reliant on it, and consider the need for pension design to reflect employment patterns that were more common amongst women.

“When considering the merits of any policy recommendations, the commission should undertake equality impact assessments at the earliest stage of development and consider the potential of pension policies to narrow the gender pensions gap and tackle gender inequalities,” the think tank added.

In its recommendations for the government, the WBG called for the urgent examination of the interactions between pensions need and other areas of social security.

It also urged the government to address the ‘regressive nature’ of pension tax reliefs and explore alternative uses of these funds to reduce pension inequality, to introduce mechanisms to recognise unpaid care work in pension entitlements, and ensure that sufficient state pension continues to be paid and is not dependent on top-ups means-tested on couples’ incomes.

“It is widely agreed, including by the Department for Work and Pensions, that the state pension alone is not and will not be insufficient to provide an adequate standard of living in retirement, and that most people are not saving enough in private pension contributions either,” the think tank stated.

“There are wide range of options under consideration, with complex and interacting implications. We are not providing detailed analysis and recommendations at this stage.

“As the commission publishes and develops its recommendations, the WBG will continue to engage with it and respond with more specific recommendations for tackling gender inequality and improving pension outcomes for women.”

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