The pension penalty. What women must know about their work-life choices.
Photo by Nienke Burgers on Unsplash
I’m about to throw a reality bomb that involves stating a fact that too many overlook: When women become mothers and opt to reduce their working hours or take on certain family-friendly measures – they are (sometimes) unknowingly placing themselves at a financial disadvantage.
And nobody is telling us.
Slowing down on work may mean being a present mother. But it also means getting a lesser pension entitlement. While this might not be an issue for some women in healthy relationships, the decision could come back to haunt you if something goes wrong in future – which could come in the form of a breakup or a tragic loss…. unless there is a private pension scheme or some other financial plan in place.
Us women need to open our eyes to this reality. And spread the word.
“Resorting to family-friendly measures and reducing working hours are putting women at a disadvantage but no one is telling women this.”
This point emerged clearly during the first Women's and Gender Studies Symposium and Conference in which an array of subjects that impact women were discussed.
Topics included the motherhood penalty, gender pay gap, work-life balance, caring expectations, and so much more.
During the first day of the two-day conference, held at the University of Malta’s Old University in Valletta, Professor JosAnn Cutajar - from the University of Malta’s Department of Gender and Sexualities within the Faculty for Social Wellbeing - touched on a topic that is present all around us – but not talked about enough.
In her typical open and frank nature she put it clearly: “After 60, more women are in deep shit.” She explained why as she unravelled the realities of gender and pensions.
“There is a big gender disparity in pensions in Malta. 60 plus is the time when most women are at risk… The pension gap is increasing,” she said.
Research showed that the average duration of the working life for women was 33 years compared to 41 years for men. The thing is that, when it comes to contributory retirement pension (the one you get after working), the number of years worked makes all the difference. Oh yes, and women tend to live longer than men.
Pensions are a complex subject, but just to give one example, in order to get a full retirement pension, a person born after 1969 must have a yearly average of 50 social contributions paid over a period of 41 years.
As the website Gemma explains: “If you have gaps in your contributory history then you will receive a lower pension on retirement.”
According to a 2019 report carried out by the National Commission for the Promotion of Equality, 30.5% of Maltese women were considered at risk of poverty compared with 27.4% of men.
The report notes that “the major factor behind this discrepancy is the high rate of elderly females with no or little pensions, who would rely on the husband’s sole pension.”
What’s worrying is that this is not a thing of the past. Today’s women of child-bearing age are making uninformed choices that will impact their future. The point here is that these women - these couples - need to be made aware of the future financial consequences before they make such decisions. (Aside: perhaps this should be included in the school curriculum or the marriage preparation course).
JosAnn stressed that, once women become mothers, many do not progress in their careers and they do not pay enough national insurance to eventually receive an adequate retirement pension.
“Pensions are linked to salary - so earning a basic salary, with little career progression, will also have an impact on a pension. And when you have children, if you don't have support, few of us continue progressing up the career ladder… Resorting to family-friendly measures and reducing working hours are putting women at a disadvantage but no one is telling women this,” she said. This is contributing to the gender pay gap and motherhood penalty apart from creating a financial imbalance amongst couples.
“After the first child, women experience a 60 per cent drop in earnings as they reduce hours or opt for part-time work, choose jobs in feminised sectors or change jobs and accept family-friendly measures… Feminised sectors are not well-paid and caring [for which the women reduce their hours] is not given enough value in our economy because of the assumption that women are born caring for others,” she said.
In short, women end up earning less and with less pension - because they slow down their career to care for the family.
JosAnn has another concern: “I am also worried about the separation law in Malta. Women are expected to work when they separate. Imagine you get separated at 55, have little work history, so you end up earning a minimum wage while the husband, who was relieved from child rearing by the wife, continues amassing thousands… This is an issue we need to speak about.”
“The government has pushed women to join the labour market but we are not pushing men to do the caring work – this is the future,” she said as she stressed that sharing household and caring responsibilities was one of the ways to address this issue moving forward. She also spoke about the importance of setting money aside for the future, because the reliance on retirement pension will not be enough.
“We are not thinking about the future when it comes to human wellbeing – just about financial wellbeing,” she said.
Share your views?
Do you have something to share on the subject? Is there a topic you feel passionate about and would like to talk about. If so you can comment below or send an email on hello@womanunclouded.com so we can discuss how to get your voice heard.