To paraphrase George Orwell, all people are equal, but some are more equal than others. This month sees the parliamentary debate on the rise in the state pension age for 1950s women, and a report from the Pensions Policy Institute on ways of tackling the pensions gender gap.
The new state pension tries to make things equal between men and women. Henceforth, each will have their own state pension entitlement, accrued in the same way and paid from the same state pension age.
It is all the more ironic then that one of the grounds for complaint about the recent rise in the state pension age for 1950s women is that it is discriminatory.
The fact is, it was discriminatory before the change and most women, albeit not those in this particular cohort, will get a better state pension under the new rules.
To be fair, many of the Women Against State Pension Inequality members do not dispute this.
Their issue is not the change but the timescale and lack of communication that did not allow them time to prepare.
In contrast, the PPI report does not look for equality of treatment but for ways of providing equality in the end result, acknowledging that women’s working patterns are different and likely to remain so. The simple truth is that women tend to have lower pensions than men because they are likely to earn less, and the main reason they earn less is because they are more likely to take a career break. This difference is often referred to as the “motherhood penalty”.
Taking time out affects ongoing earnings capability, something demonstrated by the fact both average earnings and pension contributions are slightly higher for women in comparison with men below the age of 35, after which the pattern reverses and the gap becomes much wider.
Research by the Wellbeing, Health, Retirement and Lifecourse project shows a career break does not just have an impact on income during the time off. In most cases, earnings never return to the level they were at before. Many returners choose to work fewer hours and this typically means they are also placed in less senior roles.
This pattern does not suit the traditional approach to pension planning, which is generally based on long-term and persistent employment.
There is less expectation that this will be with a single employer, but starting early and saving regularly is the usual advice.
A career break can deliver a fatal blow to this strategy. Indeed, the PPI research shows that only 34 per cent of women are likely to replicate their pre-retirement income at state pension age after taking a five-year break, as opposed to 49 per cent of those working continuously.
An obvious approach, but one which does not seem to have gained much traction to date, is to make use of the fact career breaks are usually triggered by significant life events, which could be targeted as “teachable moments”.
Research shows people respond more to information that is relevant to their particular circumstances, and pre-maternity workshops could be used to inform expectant parents and direct them to appropriate guidance.
The PPI report also suggests more flexible investment options, which would allow leavers to alter their risk profile when they are not working, as well as making it easier to consolidate pensions from broken periods of service with different employers.
Some of this will be challenging to deliver but we do need to work on it as an industry.
While we must always do our best to be fair, we can never be truly equal.
What we need are policies that admit the differences and address them, rather than those that simply try to make everything equal, even in very unequal situations.
Fiona Tait is technical director at Intelligent Pensions
You can follow her on Twitter @PensionsGirlie