Source · Select Committees · Public Accounts Committee
Recommendation 4
4
HM Treasury has done little to identify and manage the stark differences in average pensions...
Conclusion
HM Treasury has done little to identify and manage the stark differences in average pensions between genders and other groups. HM Treasury does not collect and analyse data on how pension outcomes differ across groups of scheme members or across generations. The NAO report identified a 45% gap in the average pension being paid to male and female pensioners. Similar gaps most likely exist in other groups, such as black and minority ethnic scheme members, but the Government Actuary’s Department tells us that there is insufficient data which means it is unable to look at this. The different pensions outcomes between male and female pensioners exist because of past differences in pay, and HM Treasury seemed resigned to the pension gap enduring for many decades after the pay gap is closed. However, we are concerned that this will lead to inequalities persisting and could lead to legal challenges in the future. We are also concerned that HM Treasury does not specifically consider whether armed forces pension scheme arrangements are sufficient to support personnel when it becomes time for them to move into civilian life. Recommendation: HM Treasury should be proactive in collecting and analysing data to identify where significant gaps in average pensions exist between different groups. This analysis should inform a wider study on the adequacy of public service pensions, and to understand the impact of differences in pay and working patterns.
Government Response
Acknowledged
HM Government
Acknowledged
4.1 The government disagrees with the Committee’s recommendation. 4.2 Differences in public service pensions between different groups are a function of past differences in earnings over members’ careers rather than differences in pension provision itself. 4.3 The government agrees on the importance of collecting and analysing data of the drivers of differences in pensions savings between members of different groups. The government has made reporting of the gender pay gap mandatory for all public sector employers, and gender and ethnicity data for respective workforces are included in reports published by independent pay review bodies. Office for National Statistics (ONS) statistics show that the median gender pay gap among full-time employees is lower in the public sector (11.2%) compared to the private sector (14.1%). 4.4 The focus on drivers is supported by practical challenges to collecting data on pensions savings according to other protected characteristics. Data on members’ pensions savings are held by scheme administrators for the purpose of paying out pensions and carrying out scheme valuations. Data on protected characteristics, apart from age and gender, are not relevant for these purposes and so are not currently collected by schemes. Schemes may continue to explore options to collect pensions savings data according to other protected characteristics within data regulations. 4.5 Differences in pension savings related to different rates of participation in public service pension schemes are addressed in the response to Recommendation 3. 4.6 As well as providing a better indication of the reasons for differences in pensions savings, the focus on differences in earnings is supported by the fact that these can more readily be addressed by government, for example, through pay gap reporting and targeted career programmes to support equal career opportunities. In contrast, it would not be appropriate for the government to review retrospectively accrued pension rights where these rights were accrued according to the rules of the scheme.