Closing the Gender Gap in Retirement Income: What Difference Will Recent UK Pension Reforms Make?

Abstract

The second report of the Pensions Commission sought to establish a framework for a sustainable pension system for future generations of pensioners in the UK. The framework has been largely accepted by government in their recent White Paper, Security in Retirement: Towards a New Pension System (2006). Legislation will follow. The Commission and the government have made a number of claims about how their proposals will benefit women. Reforms have been welcomed by women's lobby groups. This article presents a gendered analysis of the Pensions Commission proposals using unpublished data generated by Pensim2, a pensions' simulator developed by the Department for Work and Pensions. Substantial improvements for women will be in the long term only, and will depend heavily on the extent to which gendered patterns of work and family life change in future. For women who follow traditional paths of combining part-time work with looking after children and kin, outcomes will depend on partnering arrangements. If they are married or cohabiting, they will be better off; but if they live alone in later life, the principal advantage of the proposals will be a reduction in means testing rather than an improvement in levels of income.