Source · Select Committees · Public Accounts Committee
Recommendation 23
23
The National Audit Office found there were stark differences in the average pension received by...
Conclusion
The National Audit Office found there were stark differences in the average pension received by scheme members, when analysed by gender. Their report identified that the average pensioner is paid £10,000 annually, but there is a 45% gap in the average pension being paid to male and female pensioners. The largest gap the NAO identified was in the NHS Pension Scheme, at 63%.54 We challenged HM Treasury on whether it was right and fair for there to be such a gap. HM Treasury told us this gap in average pensions is determined by differences in the pay history of these two groups and what we see in the pension data reflects historical inequalities in pay over many decades. HM Treasury said that its response is to try and close the pay gap and it is seeing evidence that it is closing. However, HM Treasury commented that closing the pay gap alone will mean the gap in average pensions will likely persist for many decades, although it did not have a target for closing the gap in average pensions, nor could it commit to a timescale.55 However, the National Audit Office also identified other factors that affect the gap in average pensions, such as differences in working patterns between gender (for example, female scheme members are more likely to work part-time).56
Government Response
Acknowledged
HM Government
Acknowledged
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.