Pension changes and the gendered impact: Accelerated action without consideration for women

For over a century, the International Women’s Day (IWD) has raised awareness of key issues relating to gender inequality and has been used as a platform to engage communities and promote positive action. This year, the IWD campaign’s theme ‘Accelerate Action’ is a call to bring about action to dismantle the systemic barriers women face and advance gender equality.

This year’s theme provides an opportunity to look further at what happens when action is taken without consideration of the gendered impacts. Systemic inequalities in women’s working lives contribute to the gender pay gap and persist into retirement which directly influences the gender pension gap. Women born in the 1950s and 60s have been affected by the change in state pension age, and many experienced hardship as a result of the insufficient notice provided of the change which has had a detrimental effect on their retirement plans and lives.

The WASPI Campaign

The Women Against State Pension Inequality (WASPI) campaign was formed in 2015 in response to pension reforms that significantly affected the women born in the 1950s and 60s. These reforms aimed to equalise the State Pension Age (SPA) between men and women, but the WASPI campaign highlights that the changes were implemented without adequate communication to those directly affected. As a result, many women faced significant financial and emotional distress due to the lack of notice and the abrupt changes to their retirement plans.

WASPI and similar groups don’t oppose the equalisation of the SPA itself, but their concern lies in how the changes were implemented. The accelerated timetable, combined with insufficient notice, left many women with little to no time to adjust. This failure to properly inform women about the reforms sparked widespread controversy about fairness and the responsibility of the government in ensuring that those impacted had enough time to prepare.

The timeline of SPA equalisation

The most controversial change came from the 2011 Pensions Act, which brought forward the SPA increase for women born in the 1950s, significantly reducing the time they had to plan for retirement. Many received this information too late, with some women having only a year’s notice—or none at all. According to the House of Commons Library, around 2.62 million women were affected by the 2011 changes by 2018.

The impact of accelerated changes: A gendered crisis

The increase in the State Pension age (SPA) has had a detrimental impact on older women’s finances, making it harder for them to manage their income and bills. The effects have been particularly harsh for those who’ve had to wait longer to receive their pension. Single women are more affected than those with a partner, and many have struggled to stretch their pension savings further, especially given that many already face low pay and poverty. This has taken a significant toll on their personal, financial, and mental wellbeing.

Gendered barriers in the labour market: A direct link to gender pension inequalities

The gendered barriers in the labour market, particularly around the provision of care have long-lasting effects on women’s financial security, including their State Pension. Women are four times more likely than men to give up work to care, often for multiple family members. As unpaid work isn’t valued or counted by existing economic measures, this means the State Pension system doesn’t fully reflect their contribution to the economy. Meanwhile, lower wages and the lack of affordable childcare create barriers that prevent women from earning as much as their male counterparts.

By the time women reach their late 50s, their average pension savings are less than two-thirds of men’s, with much of this gap caused by labour market inequalities like women’s prevalence in part-time, low-paid, undervalued jobs. These challenges are compounded for disabled women and women from racially minoritised groups.

Disabled women, for example, are more likely to be unemployed, and be funnelled into lower-paid roles. Racially minoritised women are more likely to be underemployed in terms of skills, and experience higher pay gaps. Their ability then to secure stable, well-paying jobs or advance in their careers is severely affected. These intersecting barriers exacerbate the financial inequality that these groups experience, leaving them with even fewer resources to build up adequate pension savings.

The unequal division of care work, women’s interrupted career histories due to caregiving, women losing out financially in divorce settlements, and the economic impact from the COVID-19 pandemic have all played a role in women’s lower lifetime pension contributions.

For women born in the 1950s and early 60s, these systemic issues, combined with the accelerated equalisation of the SPA, have created unique challenges. The equalisation of the SPA taking effect quicker than expected has essentially robbed many women the opportunity to build up a sufficient level of pension income, and worsened existing inequalities that have persisted throughout their lives.

Health and pension inequality: A growing concern

Although the SPA was increased in response to an ageing population, data from the National Records of Scotland shows life expectancy of age 65 stalled after 2012-2014, declined during Covid-19, and remains below pre-pandemic levels.

Nearly one in four ‘economically inactive’ people under SPA were out of work due to long-term sickness or disability. As disability becomes more prevalent with age, ill health remains a major concern for many women approaching SPA.

The rising SPA has forced women to stretch their pensions for longer periods. However, the proportion of life spent in good health has been decreasing rapidly for women compared to men. This limits women’s ability to remain in the workforce, as 1.5 million women are now ‘economically inactive’ due to long-term sickness, 200,000 more than men. By 2030, women in the most deprived areas are expected to experience over 16 years of ill health before reaching SPA.

The Department for Work and Pensions (DWP) reports that the ‘economic inactivity’ rate for women aged 50-64 was 31.3% in 2024, compared to 23.2% for men. For this cohort of women, being sick, injured or disabled continues to be the main reason why they’re not engaged in the labour market. Women in this group were twice as likely than men to report that caring responsibilities were also one of the main reasons for not looking for paid employment.

As women approach retirement, many may need to manage their health or take time off work. While working longer has benefits, both in terms of pension contributions and the social aspect, these are only enjoyed when individuals don’t feel they are forced to do so. The longstanding inequalities women face throughout their careers contribute to the gender pension gap, and with more women leaving the labour market early due to increasingly poor health, the financial impact is particularly acute for those women affected by the SPA equalisation.

The gender pension gap and growing inequalities

Women are more likely to rely on the State Pension in retirement but are also less likely to receive the full amount. Many women face career interruptions due to caregiving, leading to gaps in National Insurance contributions. Despite the increase in the SPA resulting in fewer women pensioners, the number of women living in pensioner poverty has actually risen. Women make up more than two-thirds of pensioners living in poverty, with single women particularly affected.

A recent study from NOW: Pensions revealed that, on average, a woman must work 19 years longer than a man to accumulate the same level of pension wealth . For young women, barriers to auto-enrolment, such as low earnings and age, exacerbate this gap. Currently, 100,000 more young women than young men do not qualify for auto-enrolment, and many women are not in pension schemes to begin with. Scottish Widows found that, of the 14.6 million women currently employed in the UK, 17% (2.5 million) do not qualify for auto-enrolment compared to just 8% of male employees.

A simplistic view that focuses on individual responsibility and choice does not recognise the gendered constraints around these. It also overlooks the many barriers women face in later life when it comes to employment, as well as the lifetime of inequalities that continue to affect them as they approach, and are well into, retirement.

The current context: Recommendations and government inaction

In response to the WASPI campaign, the Parliamentary and Health Service Ombudsman (PHSO) conducted an investigation into how the DWP handled communication about the SPA changes to affected women. The PHSO found that the DWP failed to adequately inform women about these changes and how they would affect their retirement plans. Although the PHSO was not able to examine the speed at which the changes were implemented, it was clear that this had a significant impact on women’s ability to save for retirement, even if they had been properly informed.

The PHSO’s investigation into the maladministration of pension changes has offered some hope for those affected. The 2021 report found that the DWP failed to adequately inform women about the changes, depriving them of the opportunity to adjust their retirement plans. Despite these findings, the UK government has refused to provide compensation for the women who were unfairly impacted. This refusal to provide fair compensation is merely a continuation of the injustices felt by this cohort of women, with decisions that continue to penalise them, and sustain gender inequality.

Close the Gap’s calls for action

Given the compounding factors that contribute to women’s pension inequality, particularly the severe impact on women born in the 1950s, it’s clear that significant action is needed. While prompt action is vital, sustained long-term commitment is necessary to drive lasting change and ensure the advancement of women’s equality in the workplace.

To promote gender equality and close the gender pension gap, we call on the UK government and employers to implement the following measures:

• Compensation for WASPI women: Provide fair compensation to help women secure financial stability in retirement.
• Affordable and accessible childcare: A vital step in reducing the gender pay and pension gaps, as outlined in our joint paper ‘A Childcare System for All’.
• Family Carer’s Top-Up: A policy that would see the government contribute to carers’ pensions at the National Living Wage level.
• Workplace pension reform: Address the barriers that prevent many women from qualifying for auto-enrolment.
• Government support for working women: Offer statutory paid leave for carers.
• Employers should take action to address the inequalities that disabled women and racially minoritised experience in accessing and progressing in the workplace.
• Employers should develop gender-sensitive employment practice that specifically tackles the barriers faced by disabled women and women with long-term health conditions.

These actions are key to advancing women’s equality in the workplace and securing a fairer retirement for women across the UK.