Private pension reform and personal accounts in the UK: Implications for women

Abstract

Using UK survey data on labour force participation and earnings and a model developed by the Department for Work and Pensions, I describe the unique challenges women face in accruing private pension benefits and simulate likely outcomes for women under the Government's proposed system of personal accounts. Projections of savings in personal accounts for male and female full-time median earners with the same work histories reveal that women would have about 27 per cent less savings available for retirement due to their lower earnings. This gap would grow, to 31 per cent, upon annuititization because single-sex annuity rates are used. Additional modifications that take into account typical work patterns of women, such as extended periods of part-time work, further reduce the savings they would accumulate in personal accounts. Several key policy provisions could improve outcomes for women including allowing spousal contributions and requiring joint-life or unisex annuities.

Citation

Hermes, S. (2009), "Private pension reform and personal accounts in the UK: Implications for women", Lewin, D. and Kaufman, B.E. (Ed.) Advances in Industrial & Labor Relations (Advances in Industrial & Labor Relations, Vol. 16), Emerald Group Publishing Limited, Leeds, pp. 161-180. https://doi.org/10.1108/S0742-6186(2009)0000016010