Most retirement systems have failed to grow and safeguard the savings of men and women equally. But there are a number of strategies that can solve the problem.

By Han Yik


One of the main objectives in this series on rethinking retirement is to improve retirement outcomes. Improved retirement outcomes for individuals can be defined as having benefits that are both adequate (able to meet basic spending needs) and secure/sustainable (able to last through the retirement period). Unfortunately, in most systems currently there exists a gender pension gap, due to a variety of factors, both demographic and structural.

Compared to men, women tend to earn less, take more time out of the paid workforce for caregiving, and live longer, a combination of factors that contribute to a significant gender pension gap. Women in general lag behind men in terms of their pension outcomes – on average receiving 26% less retirement income1.

The OECD’s recent report on this topic, Towards Improved Retirement Savings Outcomes for Women, offers a comprehensive analysis of the key factors contributing to the difference in pension outcomes between men and women as well as policy guidelines to address these issues. Some of these key areas are:

Existing Pay GapFamily Care ResponsibilitiesJobs with Retirement SavingsLife Expectancy
In many countries around the world, women still earn less than men for the same jobs (in OECD countries, the average wage gap is 12.8%)Encompassing both child care and care for elderly relatives, this can apply for both men and women but in general the burden still disproportionately falls to women in most countriesDue to family responsibilities, even when women return to work, they are often in positions without access to retirement savings arrangements (i.e. part-time, gig economy)Women can expect to outlive men by 4.5 years on average (based on World Bank data)
Lower earnings in general translate to lower savingsCombined with lower savings, this leads to even lower pension outcomes

Family care responsibilities are a critical component to a thriving society and arguably in a family’s and country’s best interests to promote. However, under most current systems, caregivers end up sacrificing retirement savings in order to fulfil these responsibilities, either by taking time away from the paid workforce, by limiting hours worked, or by making other career trade-offs that result in lower lifetime income and retirement savings. And, of course, caregiving needs are growing for elder care alongside increased life expectancy.

In addition to the OECD’s policy proposals to make retirement plans more gender neutral, individual account systems provide the foundation to address the gender pay gap. Ensuring that every adult – even those whose primary occupation is unpaid work at some points in their lives – has an individual retirement account can build retirement savings for women, build long-term financial decision-making skills, and provide a vehicle for contributions during periods of unpaid work. In addition, to providing accountability, an individual account provides empowerment through the ability to watch one’s savings grow and compound over time. Three specific tools offer opportunities to address the gender pay gap.

Addressing the gender pension gap is an important component of being responsive to the changing demographic situation in the coming century. For example, in the United States, one of the few areas of bipartisan agreement is around the value of family. More than half of the fifty states have either active or pending paid family leave legislation, and President Biden’s recently announced American Families Plan aims to introduce a national paid family leave program.

Lastly, to address the issue of longer female life expectancy, what is old may become new again – namely, the use of “tontines”. Tontines are mortality pooled investment vehicles in which participants earn income during their lifetimes, and the surviving participants shares increase as other subscribers die. The concept was created in the 1600s as a means of pooling longevity risk. Although they were widely used until the mid-18th century, they were largely discontinued once investors began finding loopholes in the structures of the time. Currently, they have been re-examined as a possible way to address the issue of longevity risk. One idea is to introduce an investment vehicle during decumulation to participants who invest a set amount in return for a payment or income stream. The initial groups can be formed through age bands (to ensure a more even distribution of life expectancies) and as each investor passes away, his or her shares can be re-allocated to the surviving members.

Up to this point, most retirement systems have failed to grow and safeguard the savings of men and women equally. But there are ample strategies to solve the problem. Eliminating the gender pension gap will improve retirement outcomes for women, giving equal access and opportunity to retire with dignity to half the global population. This is a priority that should not and cannot be ignored. As we continue this series, FCLTGlobal will next look to cover the importance of retirement savings and retirement spending.


1 Towards Improved Retirement Savings Outcomes for Women – OECD, March 10, 2021

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