Comprehensive analysis shows the importance of early personal provision, especially for women. The surprisingly large gender gap is added to the general one.
Kan event has no consequences. And so the flapping of a butterfly’s wing can trigger a hurricane somewhere in the world in a completely different place. At least this is what the physical-mathematical chaos theory says. The very simple rules of mathematics, on the other hand, follow the fact that the more you earn in your professional life, the higher the statutory pension. Since, according to many analyzes, women are generally paid less than comparable men for similar work, it is obvious that they are also worse off in old age.
A comprehensive study by the University of Mannheim and the Dutch Tilburg University now shows impressively the size of the gender-specific pension gap. It was created on behalf of the asset manager Fidelity International. Accordingly, the average expected difference between women and men in Germany is around 26 percent.
Women therefore receive a good quarter less in the state pension than their male colleagues. In figures, this means: On average, a woman who retires at the age of 67 would receive 140 euros less a month than a man according to current calculations.
Calculated conservatively, based on current estimates of life expectancy, one could assume an average pension period of 15 years, said Alexandra Niessen-Ruenzi, professor at the University of Mannheim, on Tuesday at the presentation of the study in Frankfurt. And so this woman was missing a total of 25,000 euros compared to a man. In addition, there is the general gap in the provision of statutory pension insurance, which applies equally to both, said Claudia Barghoorn, Head of Private Customers at Fidelity International.
Company pension plan even worse
The analysis did not take into account company or private pension schemes, said Niessen-Ruenzi. According to surveys, the differences are much more pronounced, at 65 percent and 36 percent. To calculate the gender-specific statutory pension gap, Niessen-Ruenzi and Professor Christoph Schneider from Tilburg University used representative data from the Institute for Employment Research (IAB) for the years 1993 to 2014, and the pension entitlements of a good 1.8 million employees calculated.
Another result of the analysis: Depending on age, women are affected to different degrees by the gender pension gap. Up to the age of 35 there are hardly any differences, said NiessenRuenzi. But from then on, the gap widened, since men earn significantly more pension points than women and could therefore expect higher pension payments later. In the group of 36 to 45 year old women, the gap is 15 percent, for 46 to 55 year olds it is even 27 percent. The most likely reason for this is that many couples started families in their thirties, Niessen-Ruenzi said.
Since women are more likely than men to reduce their working hours after the birth of a child, the gender pay gap begins in this age group – with drastic consequences for women’s finances and their future retirement. The term “motherhood penalty” can be found in the literature. In addition, women cared for relatives more often and also performed worse than male colleagues in salary negotiations.
Even small steps can help
In order to close this gap, it is important to start taking small steps as early as possible, according to the analysis. A 40-year-old woman, for example, would have to set aside an additional 77 euros every month in view of an expected return of 3 percent, as is possible with mixed funds according to the BVI fund association, and an inflation rate of 1.5 percent, said Niessen-Ruenzi. With an expected return of 5 percent, for example for equity funds, the monthly provision amount is reduced to 57 euros. At the age of 50 it is 124 or 105 euros. An almost 60-year-old woman, on the other hand, could hardly do anything herself, because the time and the compound interest effect were missing. It is fundamentally important to focus more on women in financial advice and possibly also to give more political support to their private pension provision.