The impact in Spain of the gender gap in pensions exceeds €26 billion

• This gap entails a 2.4 billion euros and 2.9 billion euros loss in revenue in Personal Income Tax and VAT, respectively.

• Women receive almost 24.5 billion euros less in pensions than men, despite the fact that the percentage of pensioners is essentially balanced.

• Pension contribution gaps due to maternity and long-term unemployment are key to the gender gap.

The gender gap in pensions exceeds 26 billion euros: 2.2 percent of the GDP. This is one of the main conclusions drawn from the third study by ClosinGap, “Opportunity cost of the gender gap in pensions”, presented today with MAPFRE’s leadership.

According to the report, the figure corresponds to the Gross Added Value (GAV) resulting from a reduction in the consumption capacity of female pensioners, who receive lower pensions than men. This fact implies lower tax collections by the Tax Agency, in the amount of 2.4 billion euros in Personal Income Tax (2.2 percent of the total collected) and 2.9 billion euros in VAT (2.2 percent of the amount collected), which are no longer collected due to the non-existence of this potential economic activity. The report also calculates what this lower activity means in terms of employment: 414,600 job positions are no longer created, equivalent to 2.1 percent of the total number of people employed in Spain in 2018.

In the words of Antonio Huertas, Chairman and CEO of MAPFRE, “all gender gaps are unacceptable, but the pension gap is particularly damaging for women, given that their longevity and healthcare needs are even greater. It is an inequality that is being corrected but is one that, in terms of individual justice, needs to be accelerated and, due to its impact on the economy and public necessity, we need it to be accelerated.”

As the study points out, the public pension system currently invests fewer resources in women: pension expenditure for women is almost 24.5 billion euros lower than that for men, despite the fact that women account for 48.4 percent of total pensioners (4.2 million) and receive 51.6 percent of pensions, receiving more than one type of pension more frequently than men.

Therefore, although the gap has been reduced as far as the highest pensions go, given that women generate their own pension, the average pension for a woman -including all pensions- is 740.20 euros, versus 1,162.30 euros received on average by male pensioners. This difference of 422.20 euros increases to 450.10 euros in the case of retirement pensions.

Pension contribution anomalies are the key to the gap

The career path followed by women is one of the main determining factors in their receiving a lower pension. This career path therefore results in pension contribution lapses due to leaves of absence related to maternity and raising children, and also to pension contribution gaps arising from long-term unemployment. Ultimately, combined or separately, these factors result in smaller pensions than those received by men.

In the case of pension contribution gaps resulting from the career terminations due to maternity, the higher the educational level achieved by working women and the longer the period of unemployment, the greater the impact on the public retirement pension. In this way, the contributory pension received by a woman with high school-level education who decides to take a leave of absence to care for a child for three years, and who also interrupts her career for nine years to bring up the child, will be 10 percent less than what she would have received had she not halted her career. With two children, the pension would be 11.9 percent lower. In the case of highly qualified women, the pension reductions in these cases would be 14.8 percent and 18.4 percent, respectively.

Additionally, the higher prevalence of long-term unemployment among women is the cause of pension contribution gaps in this context. Therefore, according to the report, in 2018, 11.3 percent of women aged between 35 and 44 would have generated pension contribution gaps due to unemployment as a result of to the economic crisis, but only 1.7 percent could voluntarily supplement them for their retirement. In the case of men, 8.6 percent of the total were found to be in this situation.

According to Marieta Jiménez, President of ClosinGap, “these figures show the long road yet to be traveled to achieve full equality between men and women at all stages of life, and more especially in the last period, the most vulnerable one.”

Finally, the study by ClosinGap emphasizes that the cost of dependency grows from 5,000 euros per year when an individual is aged between 65 and 69, up to almost 20,000 euros when aged over 80. The fact that women live longer, but with worse health, as indicated in the first ClosinGap report, combined with the smaller pensions they receive, means that the economic cost of care for women’s dependence, aged over 85,  is 2.4 times the average amount of their public pension due to retirement, while in men, it barely exceeds 1.4 times the amount.

About the study

“Opportunity cost of the gender gap in pensions” is the third ClosinGap report. Focused on analyzing the gap in pensions, the study seeks to put into figures the opportunity cost of the gender gap and uncovers the measurable and quantifiable consequences of inequality between men and women in this context.

About ClosinGap

ClosinGap. Women for a Healthy Economy is a platform integrated by Merck, MAPFRE, Vodafone, Repsol, Meliá Hotels Internacional, L’Oreal Spain, Mahou San Miguel and Solán de Cabras, BMW, Inditex, PwC and Bankia.

The platform was created with the aim of analyzing the economic impact on society arising from the lack of equal opportunities enjoyed by women. To achieve this, the companies analyze, in bi-monthly reports, the gaps existing in the fields of health, pensions, the digital environment, conciliation and co-responsibility, leisure, tourism, consumption, mobility, and the rural context.

ClosinGap originates from Healthy Women, Healthy Economies, an initiative launched globally in 2014 by Merck, the leading company in science and technology, under the umbrella of the Asia Pacific Economic Cooperation Forum, with the aim of identifying and eliminating the barriers that prevent women from developing to their full potential in society. Spain is the first country to adapt it to extend the experience to the circumstances arising in the European Union.