Women who get divorced, take extended maternity leave or time out of the labour force as caregivers face a higher risk of poverty in old age, Insurance Ireland has warned. The group has called for a reform of pension and tax law to make sure women’s pension pots – which are estimated to be a third to a half the size of men’s – don’t shrink even further. Insurance Ireland chief executive Moyagh Murdock said the Government’s new auto enrolment retirement scheme has no provisions for extended maternity leave (beyond six months) or parental leave.
“The problem with taking time out is that it’s at the most critical time of your pension pot fund,” she said.
Current tax credits for time out of the workforce do not cover all situations of caregiving experienced by women – they are rigidly defined, and these should be reviewed and gender-proofed.
“They do punish one gender more than another.”
“It doesn’t affect a lot of the policymakers so it’s not a priority.”
Ms Murdock also called for clarification on new EU rules for pension providers, which could put pension adjustment orders – court-ordered pension payments for ex-spouses – at risk. “[Pensions are] a major determinant of women’s financial well-being after a divorce,” she said. “Unless the legislation is amended as a matter of urgency, this may result in thousands of women being left facing poverty in retirement,” Insurance Ireland said in a statement.
A survey by the Competition and Consumer Protection Commission (CCPC), published today, found that 29pc of women have no pensions, investment income or savings, compared with 22pc of men. Women (18pc) are also much less likely than men (29pc) to expect to use income from a rental property in retirement. A survey by Standard Life earlier this year found that the average pension pot for women is €89,000 – almost half that of men, who expect to draw down €170,000. Research by the Economic and Social Research Institute (ESRI) from 2019 puts the pensions gap – the difference between male and female pension pay-outs – at 35pc, with retired men getting €150 per week more than women.
Ms Murdock welcomed Government proposals to keep the retirement age at 66 while paying a bonus to those who stay longer in the workforce, saying it will also help in the search for talent. “It’s a good compromise. So many people do want to continue working,” Ms Murdock said. “It will also help the whole resourcing issue the country is facing.” “We can see across the board, in all sectors, the difficulty in getting suitably qualified staff.”
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