Improving the situation of women in old age and ensuring that they are treated fairly has taken centre stage in pension reform debates, from France and Mexico to Germany and Japan, to name just a few countries. Indeed, in many countries women’s pensions are far lower than those of men, and old age poverty affects women disproportionally. While gender pension gaps have been falling from 28% in 2007 to 23% in 2024, on average across the OECD, women still receive only 77 cents for every Euro or Dollar that men receive in pensions.
Countries have been trying to address disadvantages of women in retirement in different ways. Chile and Mexico, for example, undertook major pension reforms over the last two years, and in both countries, they included boosts specifically to women’s pensions.
One policy measure frequently used in the past was to grant women earlier retirement, as a compensation for time spent caring for children and elderly relatives. While many women may have appreciated the opportunity to retire early, this also resulted in lower pensions given the shorter contribution spell. By now, the vast majority of OECD countries have equalised pension ages for men and women or are in the process of doing so; only 6 countries will maintain different ages in the future.
Most OECD pension systems link retirement benefits to contributions made by workers over their lifetime. A common feature of these systems is to credit times out of paid work spent caring, mostly by women, in the calculation of pensions. Such pension credits go a long way in narrowing gender gaps, provided that women return to full-time work after maternity and parental breaks.
The reality, however, is that many women do not return to full-time work but only work part-time or stay out of work altogether. This affects lifetime earnings, contributions, and thus pension levels. Add to this the persistent gender pay gaps observed in nearly all OECD countries and it becomes clear that pension systems alone, however well designed, will not be able to remove the disadvantage that women are facing in retirement.
It is in the labour markets where gender differences need to be tackled most urgently. The analysis in this report shows that gender differences in employment, hours worked and hourly wages make equal contributions to gender gaps in lifetime earnings – each contribute about one‑third to the total. These lifetime earnings gaps, at 35% on average across OECD countries, in turn, are the key factor driving gender pension gaps. And change also has to happen at home; without better sharing of unpaid work it will be difficult for women to increase their working hours.
This does not mean, however, that pension policies have no impact on gender pension gaps. Given that more women than men rely on basic pensions and old-age safety nets, any policy measures that support and redistribute towards low-income retirees will also have an effect on gender pension gaps. The gender pension gap is lowered by high levels of means-tested first-tier benefits, as in Denmark, Iceland and Norway. for example, and by a progressive pension formula, as in Czechia.
Pension credits, as mentioned, also help stabilise women’s pension rights during caring breaks. Moreover, despite increasing labour force participation of women, survivor pensions are still very important. They reduce the gender pension gap in mandatory earnings-related schemes by about one‑third on average.
Several countries have universal flat-rate pensions which, by definition, have no gender gaps as every retiree gets paid the same. Moreover, public pensions are set in many countries at a level that requires additional occupational and private pensions or personal savings to ensure adequate living standards in old age. And here again, women are at a disadvantage. They are less likely to work in sectors that offer good occupational pensions. Also, employer pension plans rarely credit career breaks or part-time work to provide child- or eldercare. Furthermore, due to lower incomes women also have less capacity to save. The Netherlands and the United Kingdom, for instance, are among the countries with the highest gender pension gaps, at above 35%, despite having above‑average basic pension entitlements. Thus, in asset-backed pensions, occupational and personal, policymakers also need to address gender gaps. It is only with a comprehensive strategy encompassing labour market, family and pension policies that we will be able to finally close the gender pension gap.
Stefano Scarpetta,
Director,
OECD Directorate for Employment, Labour and Social Affairs.