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Large Gender Gap in Pensions

A new report reveals large gender differences in pensions in most European countries, including Sweden and Finland. Denmark also has a gender gap, but it is much smaller.

The report Gender Gap in Pensions in the EU, presented by the European Institute for Gender Equality (EIGE), shows that the average European gender gap in pensions was 38 per cent in 2012. Denmark stands out among the Nordic countries with a gap of only eight per cent. In Sweden, men’s pensions are 30 per cent higher than those of women. For Finland the figure is 27 per cent. Norway and Iceland are not included in the report since they are not part of the EU.

More equal distribution with national old-age pension

Ole Beier. Press photo
 Ole Beier. Press photo

Ole Beier, chief of research at the Danish ATP, has studied the Nordic pension systems in a gender equality perspective. He says that the statistics in EIGE’s report can be explained by the design of the pension systems. In a nutshell, the gender differences are smaller in countries where the government-funded part of people’s pensions is dominating.
‘Men have an advantage in countries where workplace pensions and private pension savings make up a greater part of the total pension, not least because they work more, have higher incomes and have better opportunities to save money. Women’s pensions are more affected by the level of the basic state pension.’

The differences in the pension systems explain why the gender gap in pensions is larger in Sweden than Denmark, says Beier. In Denmark, people’s pensions are dominated by the national old-age pension. Today many Danish pensioners have only limited funds saved in workplace and private accounts.
‘Since our old-age pension does not vary with how much you have worked, the gender differences are not very big. This will change in the future when other parts of people’s total pensions will increase in importance.’

Larger gap in the future

Beier says that the EIGE report only gives a snapshot of the situation, as most European countries are in the process of changing their pension systems. Workplace pension and private retirement savings will increase in importance in the future, he explains, and this will probably lead to increased gender differences. So, what can be done to reduce the gap?
‘We need to find a combination of the different parts of the pension systems that makes the outcome fair to women. For example, Danish pensioners with limited private savings receive more money from the old-age pension system.’

Louise Lindfors is leading a Nordic network focusing on women’s economic citizenship and is also chair of the Fredrika Bremer Association, which has launched a campaign called Bra Pension (which means ‘good pension’). She shares Beier’s belief that the gender gap in pensions is unlikely to decrease in the near future.
‘There are no indications that the gap will disappear in the next ten years. Instead it looks like it’s becoming permanent.’

Many pensioners below the poverty line

Louise Lindfors. Press photo
 Louise Lindfors. Press photo

Lindfors concludes that women’s lower wages will determine the levels of their pensions. In addition, women take out more parental leave, work more part time, stay home with sick children more and are on sick leave to a greater extent than men. All these factors will have a strong impact on their future pensions.
One concrete measure to reduce the gap in Sweden, she says, would be to raise the national guaranteed pension. Today around 225 000 pensioners are living below the EU poverty line. Most of them are women.
‘People in this group are simply unable to make ends meet. They have to rely on their children and are often forced to cut back on food. Nobody in Sweden should live below the EU poverty line, and this should be made an explicit target.’

Updated 2 May 2020