Pension Gaps Research Articles

Life-Course-Sensitive Analysis of Group Inequalities: Combining Sequence Analysis With the Kitagawa–Oaxaca–Blinder Decomposition

Processes that unfold over individuals’ life courses are often associated with inequalities later in life. The literature lacks methodological approaches to analyze inequalities in outcomes between groups, for example, between women and men, in a life-course-sensitive manner. We propose a combination of methods—of sequence analysis, which enables us to study the multidimensional complexity of life courses with Kitagawa–Oaxaca–Blinder decomposition. This approach allows us to distinguish the share of inequalities between groups that is due to group-specific life courses from the share that is due to group-specific returns to similar life courses. We illustrate the combination of the two methods by analyzing work–family life courses and gender pension gaps in Italy and Germany. Our contribution is to systematically compare possible core analytical choices when combining typologies derived using sequence analysis with the Kitagawa–Oaxaca–Blinder decomposition. For future applications, we propose a set of practical guidelines for sequence analysis–Kitagawa–Oaxaca–Blinder decomposition.

The impact of taking up care tasks on pensions: Results of typical-case simulations for several European countries

Informal care is often accompanied by a reduction or abandonment of professional activity by the caregiver. Therefore, caregiving may be associated with a lower pension for the former caregiver than for people without care obligations. There is a large gender difference in informal care responsibilities, and this may contribute to the gender pension gap. As the impact of care-related labour market decisions depends on the design of the pension system, we carry out a cross-country comparison, in which we analyse the impact of care obligations in countries with high (Luxembourg), middle (Liechtenstein, Belgium, Portugal) and low (Slovenia) gender pension gaps. Using typical-case simulation models, we examine how the impact of care-related events is mediated by pension rules, given women's labour market decisions. To what extent does working part time or interrupting one’s career at the age of 30 or 54 reduce the later pension benefit? How are these losses mitigated by pension credits that are conditional on caregiving? We find that the mitigating effects are generally strongest in Belgium, followed by Luxembourg and Slovenia. Such credits hardly exist in Portugal, while in Liechtenstein they have only a small impact. However, the consequences of either working part time or interrupting work can also be mitigated via general rules in the system that are unrelated to caregiving (such as in Portugal and Liechtenstein). They can, on the other hand, be aggravated by the existence of higher accrual rates for individuals who extend their careers, as in Luxembourg and Slovenia.

What to offer if consumers do not want what they need? A simultaneous evaluation approach with an application to retirement savings products

Standard economic models of rational decision making provide information on how people should decide. In practice, human decisions are influenced by numerous behavioral patterns that lead to systematic deviations from rationally optimal behavior. In the context of retirement savings, this can result in substantial pension gaps, and hence in a reduction of the standard of living in the retirement phase. The aim of this work is to introduce a general framework to (simultaneously) assess and evaluate the objectively rational utility and the subjectively perceived attractiveness. We illustrate the approach by means of an application to retirement savings products. Such a combined approach can help to identify or design retirement savings products that create a high (albeit not the maximum possible) objective utility while at the same time being subjectively of high (albeit not maximum possible) attractiveness. We argue that a focus on such products might lead to improved consumer decisions compared to observed decisions that are often driven by subjective attractiveness (resulting in rather low objective utility).

Gender pension gaps in a private retirement accounts system: A dynamic model of household labor supply and savings

This paper develops and estimates a dynamic model of individuals’ and couples’ labor supply, savings, and retirement decisions to analyze how the design of Chile’s privatized pension system and a reform undertaken in 2008 affect gender pension gaps and old-age poverty. Chile has one of the longest-running private retirements accounts systems in the world, which has served as a model for many countries. The paper estimates the dynamic model using pre-reform data and compares the model’s short-term forecasts with reduced form estimates of the reform’s causal impacts. The model provides accurate forecasts, so it is used to evaluate how actual and counterfactual changes in the pension system design affect men’s and women’s labor supply and savings decisions, pension receipts, and program costs over a longer time horizon. The results show that three design features significantly reduce gender pension gaps: expanding minimum pension benefit eligibility, providing a per-child pension bonus, and increasing women’s retirement age to be equal to men’s. Overall, the 2008 pension reform largely achieved its goals of reducing gender gaps and old age poverty, although the new system costs double that of the old system.

Gender Gap in Pension Income: Cross-Country Analysis and Role of Gender Attitudes

The aim of this paper is to study the gender pension gap in Europe based on the newest EU-SILC data from the 2018 wave. The contribution of the paper is twofold. First, it provides evidence on factors shaping the gender pension gap in a large number of EU countries. Second, it analyses the relationship between the pension gap and: (1) the coverage of occupational (second pillar) pensions and (2) gender attitudes. The main factor contributing to gender inequality in pension income is the number of years in employment. The influence of tertiary education is in the direction of increasing the gap, while the effect is the opposite when the hourly labor income gap is considered. The higher coverage of occupational pensions corresponds to a higher gender pension gap. This implies that the privatization of pension plans can lead to the conversion of a wage gap into a pension income gap and reinforces women’s disadvantage after retirement. In addition, a positive relationship is observed between unexplained portions of the pension income gap and the labor income gap. This could justify the hypothesis that unexplained portions are formed by the same factors persistent over time. One such factor could be gender norms; it has been found that countries with more gender equality support have lower unexplained portions of the labor income and pension gaps.

Gender pension gaps along the distribution: An application to the French case

AbstractIn this article we estimate the relative contributions to the gender pension gap of career duration and income earned at different points along the pension income distribution, as well as the role played by minimum pensions and other partly or wholly non-contributory policies in reducing this gap. Our research covers all retirees in France in 2012 employed in the public or private sector at least once in their lifetimes. We first highlight that at every point in the distribution, the gender pension gap is wider for private-sector retirees than for those in the public sector. This is because public sector careers are less fragmented and because the calculation of the public sector reference wage does not penalize career interruptions so heavily. This relative advantage of women in the public sector is probably an additional factor explaining their over-representation in this sector. Applying the decomposition method proposed by Firpo et al. (2007, 2009), we show that composition differences in the gender pension gap are essentially due to differences in contribution periods and wages, with a smaller effect of career duration in the public sector than in the private. In the first deciles, the gap can be attributed largely to differences in career duration. This effect gradually weakens, and differences in the reference wage become the main explanation. We also show that minimum contributory pensions play an extremely important role in limiting the gender pension gap in the first deciles, essentially in the private sector. Last, we show that in all cases the unexplained share of the pension gap is substantial only at the bottom of the distribution and, to a lesser extent, in the top decile. The unexplained share is generally smaller than the explained one and favours men.

Interactivity in online pension planners enhances engagement with retirement planning – but not for everyone

PurposePeople around the world are not sufficiently capable or willing to engage in retirement planning. New technological tools have been proposed as a promising solution to foster involvement and consequently encourage retirement planning. This paper aims to test whether an interactive online pension planner can improve participants’ behaviour, behavioural intentions, attitude, knowledge and perceived ease of use, usefulness and enjoyment.Design/methodology/approachIn collaboration with a company specialised in technologically advanced pension planners, three different versions of an online pension planner were created. The control condition only allowed participants to check their pension situation and the composition of future retirement income. In the medium interactivity level, participants could choose to modify certain variables affecting their pension income, on top of the features from the control. The highly interactive planner additionally included an interactive budget tool and showed whether the accumulated pension income was sufficient to cover the desired spending. Data were collected with the help of an online panel (N = 285).FindingsThis paper finds a positive effect of interactivity on behaviour within the planner, that is, the number of clicked options, as well as on participants’ intention to check their personal pension situation in the upcoming three to six months. Moreover, this paper finds gender differences: male participants prefer a high level of interactivity, while women prefer a medium level.Research limitations/implicationsAn interesting modification to the current research design would be to use personal, self-relevant data in the online pension planner. Moreover, conducting the study in a computer laboratory could increase concentration on the task, and hence involvement. Next to gender, there might be other factors that possibly influence the results. It would be interesting to investigate other measures of behaviour such as the time spent on the pension planner. Further research should also study the effects of other features that shape user’s perception of interactivity, which include human-to-human interactivity.Practical implicationsThe results show that technological services, such as advanced online pension planners, can positively affect engagement with retirement planning. Thus, pension providers are encouraged to use interactive online pension planners. The results with respect to gender suggest tailoring pension planners to match specific preferences of recipients. New service technologies provide novel opportunities to cater to individual differences by, for example, integrating less interactive features for women than for men in a pension planner. Moreover, cognitive involvement should be stimulated by integrating relevant, interesting and valuable information.Social implicationsLack of engagement with retirement planning is an important challenge to Western societies. People who do not sufficiently search for information about their expected pension benefits may encounter significant pension gaps resulting in detrimental welfare effects at retirement. This problem is enhanced by the fact that increasingly, the risks and responsibility for retirement planning are being shifted towards pension plan participants themselves. Thus, finding ways to increase engagement with retirement planning by making use of advances in service technologies brings benefits to society.Originality/valueFirst, this paper contributes to the customer engagement literature by studying how new technological interfaces improve user experiences, knowledge and engagement within the low involvement context of retirement planning. Second, this paper advances service research by zooming in on customer heterogeneity in using the technology-based online pension planner and studying the moderating effect of involvement and gender more closely. Third, this paper contributes to the financial services literature by studying how new service technologies can help to increase attitudes, knowledge and engagement with retirement planning.

Evaluation on the Sustainability of Urban Public Pension System in China

Against the background of population aging and economic downturn, the sustainability of pension systems has aroused great concern for governments across the world. To better reflect the pressure of pension payments in the changing context, the paper aims to forecast the annual pension gap of the public pension system for urban employees in China. By the use of Cohort-component population projections and stochastic projection models, the distribution of flow-based annual pension gap in the next fifty years are estimated under basic assumptions. The results show that the pension gap continues to exist from 2017 and keeps expanding until 2070 without any policy reform. Sensitivity analyses of demographics and various combinations of policy parameters on the distribution of future pension gaps are displayed. Wider pension coverage with lower policy threshold is more likely to face larger long-term pension gap.

Die Deutschland-Rente – Ein Projekt zur Stabilisierung der Privaten Altersrente

Zusammenfassung: Das umlagenfinanzierte System der gesetzlichen Rentenversicherung als alleinige Lebensstandardsicherung stößt durch die demografische Entwicklung an seine Grenzen. Zur Aufrechterhaltung der Funktionsfähigkeit der gesetzlichen Rentenversicherung führt der Staat dem System Bundesmittel in Milliardenhöhe zu, Tendenz steigend. Um die Versorgungslücken der gesetzlichen Rentenversicherung zu schließen, kommt der privaten Altersvorsorge stetig wachsende Bedeutung zu. Hierzu hat der Gesetzgeber durch die Einführung der Rahmenbedingungen für eine staatlich geförderte „kapitalgedeckte private Altersvorsorge“ (sog. Riester-Rente) bereits in der Vergangenheit einen wichtigen Betrag geleistet. Leider hat der eingeschlagene Weg bislang noch nicht den nötigen Verbreitungsgrad erreicht, was auch daran liegt, dass das System noch nicht optimal einjustiert ist. Die Folgen einer unzureichenden Altersvorsorge zwingen zum politischen Handeln. Vor dem Hintergrund der analysierten Problemfelder soll mit dem Hessischen Konzept der Deutschland-Rente das bestehende System der privaten Altersvorsorge verbessert und gestärkt werden. Damit der Sparer langfristig von den Renditechancen des Kapitalmarktes profitieren kann, müssen u. a. die starren Garantievorgaben gelockert werden. Zugleich muss eine kostengünstige und transparente Alternative zu den bisherigen Riester-Produkten der privaten Anbieter geschaffen werden. Darum soll ein staatlich organisierter Fonds ein Anlageprodukt anbieten – den sog. Deutschlandfonds –, der auf Selbstkostenbasis operiert, aber ansonsten den allgemeinen Wettbewerbsbedingungen unterliegt. Damit soll ganz bewusst eine Konkurrenz zu den Produkten der etablierten Anbieter geschaffen werden. Im Ergebnis sollen die privaten Anbieter durch den Deutschlandfonds animiert werden, ihre Produkte attraktiver zu gestalten.

Framing the Future: Using Investment and Assurance Frames to Encourage Retirement Information Search

Many pension plan participants are inactive. They do not look up information on their retirement income and discover pension gaps too late to take action. We analyze how pension communication framing interventions motivate participants to acquire retirement income information. First, we show that classical loss frames (vs. gain) are an effective intervention, but also evoke negative perceptions and evaluations. Second, we develop new frames (assurance, investment) tapping into the same psychological mechanisms while avoiding loss wording. Based on a field experiment with 7,315 pension plan participants we find assurance framing to be an effective intervention that also avoids evoking negative evaluations.

Life Events and Pension Plan Participant Engagement

We study the use of life events (e.g., getting married, starting a new job) for effective pension communication. Pension plan participants are often not open to pension communication, nor do they engage in pension planning. Overcoming this lack of engagement is important: participants should form realistic expectations about their retirement finances, discover pension gaps early enough to be able to take appropriate action, and experience less negative emotions and retirement anxiety in case of unwarranted pessimistic expectations. Sending pension-related information when important life events take place is often suggested to enhance the effectiveness of communication. Life events may represent teachable moments and thus lead to more openness to pension communication and planning. In this paper, we first review the literature on life events as teachable moments. Second, we provide an overview of life events that are especially suited to increase engagement. Third, we present empirical evidence on life events and participant engagement. Finally, we derive implications for theory as well as practice. Overall, we find that in theory life events appear to be good points to improve communications. The evidence from in-depth interviews with experts and pension plan participants, as well as survey data from participants, shows mixed results. It seems that several major challenges need to be addressed for successfully using of life events.

« Peut-on faire l’économie du genre ? », Regards croisés sur l’économie , n° 15, Paris, La Découverte, 2014, 240 p.

Gianni betti, Francesca bettio, Thomas georgiAdis, Platon tinios, Unequal Ageing in Europe. Women' s Independence and New York, Palgrave Macmillan, 2015, X-187 p.A considerable body of literature exists on gender pay gap but few studies have been done on gender gap in pensions. Research only began on question in mid-1990s (Jefferson 2009). This book, then, is a welcome addition to small number of existing studies, and is particularly useful in providing statistical data for international comparison, virtually non-existent until now. One reason gender dimension has been absent from this debate is that malefemale pension inequality did not necessarily result in unequal living standards upon retirement. When marriage was predominant, stable form of conjugal life, fact that women's personal pensions were low was not a problem; it could be assumed that couple members would pool their income until spouse's death, at which point retirement system would begin paying out a survivor's pension.The gender pension gap became a social and research concern when a variety of changes occurred that called afore-cited arrangements into question. First, assumption of income pooling within couple may not be valid, and, as authors note, having one's own pension is a major determinant of economic independence, especially since pensions represent better part of income for a considerable proportion of retirees. It is therefore legitimate to enquire into impact of labour market gender gaps at time of retirement and how they are evolving. While women's massive entry into labour market has narrowed pension gaps, it is still difficult to apprehend magnitude of that reduction and how it is going forward. Moreover, women's rising participation in labour force has gone together with an increase in non-standard and part-time jobs. It has occurred in context of retirement policy reforms that have redefined pension calculation parameters, shifted emphasis from basic retirement benefits (where disparities were relatively low) to contribution plans (the second pillar), extended working years and adversely impacted on policies that directly or indirectly targeted women (i.e., family and conjugal benefits). Another reason, not directly mentioned in book, is increased importance of individual benefits at a time when conjugal behaviours have been undergoing profound change. When generations implicated in rising divorce rate or who have chosen unions other than marriage reach retirement age, they will radically alter structure of retired population.After explaining why it is important to be attentive to gaps between men's and women's pensions, authors present two indicators for studying them (Chapter 2). The first is Gender Gap in Pensions, calculated as one minus women's average pension income divided by men's average pension income; this applies only to individuals who have a pension. The second is the coverage rate, which integrates persons without a retirement pension, a group that may vary proportionally by country, age and of course sex. Calculating these indicators is not as simple as it seems because of difficulties in defining retirees and pensions (e.g., should private pensions be included?), especially for purpose of international comparison. Valid comparisons can only be made on basis of suitable databases. The authors draw on Survey on Income and Living Conditions or EU-SILC, a harmonised database for Europe. Further on, they enquire into feasibility of using administrative data, pointing out that though each country may prefer to use its own administrative data to compile statistics, this may make international comparisons more difficult. …

Facing the Gender Gap in Aging: Italian Women’s Pension in the European Context

The purpose of this paper is to provide an overview of the phenomenon of increasing gender inequalities that happen at old age regarding women’s pension. Moving from recent life-course theories and studies, this study analyzes the reasons behind gender-biased pension levels and how their cumulative effects result in (continuous) significant gender gaps. The article presents a European overview of pension gender gap, focusing on family and work-life issues in Italy. This is one of the first critical reviews of the small but growing literature and national data concerning the effect of gender inequalities related to pension gaps in Italy. In the past, research on the balance of welfare provision between State, family, and market has ignored gender, while more recent studies have barely explored how gender roles, changing over time, interact with the shifts in pension policies. Considering the effects of work-life balance policies since the 2000 Lisbon agenda process and its development, the study especially focuses on the Italian case within the European context. The article examines how the choices in work-life balance policies vary between different national contexts and welfare regimes, by highlighting the Italian case. In this country, welfare and social policy regimes remain very unbalanced, showing a lack of awareness of family and women’s needs, as in many Southern countries, and Italy is not able to give appropriate answers to these problems and to the question of the growing gender gap. This article finally shows the poignancy of structural and cultural reasons for gender differentiated pension levels in Italy, within the European context, according to patterns of employment, marital, and maternal status between earlier and later generations of women.

Pension Reforms, Working Patterns and Gender Pension Gaps in Europe

European pension reforms are dominated by the principles of privatization and individualization. Privatizing and individualizing pension entitlements call for a redefinition of the responsibilities of states and individuals. Moreover, statutorily introducing individualization calls for equal opportunities to be guaranteed. However, the implementation of equal opportunities is a long way off because pension‐determining factors are still subject to gender distinctions, among other things. Gender distinction is inherent in life courses as well as in welfare arrangements. Welfare arrangements determine the legitimate reasons for gaining pension rights, how the measures of different entitlements are interrelated and which factors hamper a person's ability to fulfil the pension norm. This article analyses the link between welfare arrangements and women's life courses for a better understanding of the gendered norms of pension entitlements by focusing on gendered wages and life expectancies, gendered working patterns, and the connection between care and pensions.

Pension norms and pension reforms in Europe – the effects on gender pension gaps

Pension levels in the EU15 are significantly gendered. Various reforms to pension systems explicitly aim at improving women's opportunities to build up pension entitlements. These reforms differ from country to country. We see so-called work–life balance policies to increase women's labour market participation by facilitating part-time employment in particular as well as pension entitlements for care periods outside the labour market. At the same time, however, other seemingly gender neutral reforms generally tend to have the opposite effect. These measures include changes in pension calculation norms and pension composition, increasing the importance of non-public pensions. Therefore, future female pensioners will not be significantly better off. However, for women to be better off is necessary in times of pension retrenchments and individualization. Based on recent life-course theories and studies, this article analyses the multiplicity of reasons for gender differentiated pension levels. It shows that the numerous direct and indirect pension determining factors related to life courses and welfare arrangements are interlinked on many fronts. Their cumulative effects finally result in (continued) significant gender gaps. It is argued that there are no quick fixes for reducing the gender gaps in pensions but that this will require attention to the degendering of labour market and the reformulation of life course norms.

MALE NORMS AND FEMALE ADJUSTMENTS: THE INFLUENCE OF CARE CREDITS ON GENDER PENSION GAPS IN FRANCE AND GERMANY

ABSTRACT European pension systems are in the process of change. A general development is the retrenchment of public schemes. In combination with the aim of individualizing pension entitlements, it is crucial that the pension situation of women, and of mothers in particular, be improved. Some European countries attempt to reduce the gender pension gaps with child care credits. This paper takes a closer look at the French and German systems. Can adjustments to the pension norm, in terms of different allowances for child care as introduced in both countries, balance gender pension gaps? Following the logic of the individual factors, the duration of insurance and the level of paid contributions, the main factors are analysed to evaluate the efficiency of care credits. Within the complexity of pension-related factors, adjustments to the originally male pension norms have very ambiguous effects, and they are insufficient to de-gender pension gaps.

European Pension Reforms: Individualization, Privatization and Gender Pension Gaps

European pension reforms individualize and partly privatize pension entitlements. As a consequence, state and individual responsibilities require redefinition. Moreover, when individualization is statutorily introduced, equal opportunities need to be guaranteed. However, equal opportunities are a long way from being implemented. The various pension-determining factors (for instance, labor-market participation, wages, care) are still subject to, among other things, gender distinctions. This article analyzes the interrelationship of (reformed) welfare arrangements, changed flows of resources, and female life courses in order to gain a better understanding of the gendered norms of pension entitlements.