We make predictions about the Pensions Commission
As it’s not possible to read the report yet we have to project. We are, currently, only being told what the Pensions Commission will say:
A shake-up of pensions in Britain must involve measures to close the gap in retirement savings between men and women, the revived Pensions Commission is to tell ministers.
As ever we object to this trailing of reports. For what sticks in the public consciousness is that “will say” and not what can be checked, “is saying”.
But from this position of ignorance we’ll make a couple of predictions:
According to the government-backed body, women approaching retirement have on average half the private pension savings of men, with a median pension wealth of £81,000 versus £156,000.
The first is that they’re not going to discuss - or perhaps even grasp - the distinction they’re using, that of private pension savings. This is, in the usual figures, something that only applies to fully-funded schemes. If there’s an actual pot of money allocated to the pension of that person. This is true of all those estimations of wealth, Piketty, Saez and Zucman, the Office for National Statistics and on and on, it’s wholly traditional - even as it is wrong - in wealth measurement. Pay as you go schemes are not included - despite the obvious point that 1/54th of salary per year worked is indeed pensions wealth. We pick that number because that’s how the NHS pension scheme works and there are some 800,000 nurses on that, with 90% or so being female. That’s enough to start moving averages of pensions wealth by including or not including that one scheme on its own. Do note that 1/54th of salary per year worked is a very substantial pension pot and wealth too.
It is, of course, only in the public sector that such unfunded, PAYG, pensions are found and yes, there is a substantial gender bias in public as opposed to private sector employment.
The second is that we’re likely to meet Worstall’s Fallacy here. That insistence upon what must be done without proper consideration of what is already done. For, yes, working years, salaries and so on do vary by gender - on average of course. Here it’s that we do indeed have a state pension scheme. That state pension has an actuarial value of perhaps £200,000 and, yes, it is equal over genders. So we already do something about pensions inequality. Even if we accept that initial estimate of private pensions - which we don’t, that distinction about funded and non-so - we end up with men having average pensions wealth of £360k and women £280k. Which is that women have 80% of the pensions savings of men, not 50%. This could still be a problem we desire to solve of course, but it’s rather a different problem, no?
As we say, we cannot check this because it’s not possible to read the report yet. But we do predict that these will be at least two of the problems with it.
We’re willing to be pleasantly surprised, of course. But we do doubt we shall be.
Tim Worstall