Some of The World’s Biggest Pension Systems Are Failing Women

Even before Covid-19 shuttered economies across the world, many women faced retiring with less savings than men. Now, that gap is set to widen further in some of the world’s biggest pension systems.

Women already typically earn less than men and take more time out from the workforce to have children, resulting in diminished pension pots. And as coronavirus lockdowns smash industries such as air travel, tourism, retail and hospitality, they face a disproportionate risk of losing their jobs, according to the Organisation for Economic Cooperation and Development.

The policy response to the pandemic also risks exacerbating the problem. Some countries, including Australia, the U.S., Spain, Denmark and Canada are allowing people early access to their retirement funds to weather the crisis, raising concerns that women -- who tend to live longer than men -- are further depleting their savings.

“There is some indication that women could be more affected and that the pension gap would increase down the road,” said Maciej Lis, an economist in the OECD’s pensions and population aging team in Paris. “The crisis seems to worsen the labor market prospect of women more strongly than men because women tend to work in more affected sectors.”

The issue is a further challenge for policymakers who are already grappling with how to provide for aging populations. And it is exposing underlying flaws in pension systems designed to ensure people are financially secure in retirement without being dependent on welfare.

Gender Gap

Despite its pension system being ranked the world’s third-best behind the Netherlands and Denmark, women in Australia face retirement with 40% less savings than men, similar to the European Union average, according to Mercer. In the U.S., the shortfall is 32%, according to the OECD.