For women, the risk of old-age poverty is significantly higher than for men. But why?
The term “Gender Pension Gap” has been circulating in social policy discussions for years. It highlights a simple but alarming reality: women on average receive significantly lower pensions than men.
Caregiving at the Expense of Pensions
The reasons for this are well known, even if collective bargaining agreements are not explicitly gender-specific.
It is still primarily mothers (despite the freedom to choose gender roles, we’ll stick to the traditional terms “mother” and “father” for simplicity) who spend more time raising children. For pensions, this means mothers care for children without pay, while fathers grow their pension accounts through work. After his shift, the father comes home, having secured his retirement, and lovingly plays with the child.
The gap between theory and reality is evident. Care work remains predominantly a woman’s responsibility. Even during their working lives, women spend an average of nine more hours per week on unpaid labor than men, according to Tagesthemen.
When children reach kindergarten age, mothers often re-enter the workforce—usually with part-time positions that barely contribute to their pension funds. This type of employment is aptly dubbed the “part-time trap.” Many women remain in part-time roles after having children. Beyond unequal pay for the same work, unpaid care work remains the linchpin for pension inequality.
Once the children leave home, providing an opportunity to focus on career progression, the next caregiving responsibility often arises. Whether shopping or assisting a frail partner, these duties can escalate into full-time at-home care for a spouse with a severe disability.
The phrase “Caring for relatives also pays off for your pension” on the German Pension Insurance website feels like a slap in the face for affected individuals. While caregiving time counts as contribution and waiting periods, the financial benefits are marginal.
The reality is that women’s extensive caregiving duties severely hinder their ability to build adequate retirement savings.
What Solutions Can Address the Gender Pension Gap?
Turning to the financial services industry for solutions may seem the easiest option for policymakers—it shifts the burden away from their desks—but is it socially fair? While this is the current approach, the question of justice remains open.
The extreme inequalities in pension entitlements that arise from childbirth and childcare within partnerships demand action. The ideal of parents “growing old together” is increasingly a pipe dream.
One potential solution is to pool pension claims for both parents and split them equally during the childcare period. After all, both parents contribute to the pension shortfall created by the child. Yes, in 6.25% of cases (data from 2018), the father is unknown, but utopias can accommodate such imperfections.
Utopias often hold faint glimmers of solutions. For instance, the former East Germany aimed to create a socialist state, requiring the workforce of every capable individual. As a result, women could place their infants in childcare shortly after birth. While this remains a debated issue, France guarantees every child a daycare spot starting at age two. In today’s Germany, waiting for a kindergarten spot feels as endless as waiting for a Trabant in the former GDR.
The Gender Pension Gap stems not only from family dynamics but also from the unequal pay for the same work — known as the Gender Pay Gap. According to career portal stepstone.de, the adjusted pay gap was 5.5% in 2024.
The Gender Pay Gap distinguishes between unadjusted and adjusted figures. The unadjusted gap compares average hourly wages without context. In contrast, the adjusted gap accounts for factors like education, occupation, and working hours.
While slogans like “More women in leadership positions” sound revolutionary, perhaps unions and equality officers should first prioritize enforcing the basic demand for “equal pay for equal work”.
Lastly, the question remains of how to better integrate family caregiving into pension entitlements. Utopian solutions allow us to set aside funding concerns for a moment. For example, Germany’s pension system could cover the actual contributions caregivers are unable to make.
Overcoming even the Gender Pay Gap feels like a daunting challenge. Addressing the Gender Pension Gap is an even greater uphill battle.
