Female teachers are typically retiring on much smaller pensions than their male counterparts, research has found, with part-time working one of the biggest factors eroding women’s retirement incomes.
Analysis of payouts from the teachers’ pension scheme (TPS) suggests that the average pension for a female former teacher is 28% less a year than a man in the same position.
Women received an average of £11,581 in the 2020-21 financial year, while men got £16,034, according to the financial firm Wesleyan.
It based the figures on analysis of the scheme’s accounts, using the total pension payments and the number of people being paid to come up with a figure for the average annual payment.
Among female teachers there will be those who do draw much bigger pensions from the scheme, and those who earn much less.
The gender gap is lower than in the pensions market generally – in the summer, Legal & General said women were receiving 56% less than men from their retirement funds.
However, it underlines how career breaks, part-time working and spending time in lower-paid roles have a lasting impact on people’s incomes.
Lee Quinn, an adviser at Wesleyan who speaks to teachers about their retirement planning, says the headline figures reflect what he sees.
“You find that a lot of teachers are married to other teachers, so you almost have a direct comparison – you’ve got two people who have gone through a similar journey through life together,” he says.
Quinn says the scheme is not discriminatory, and the difference is almost entirely down to female teachers building up fewer qualifying days during unpaid periods of maternity leave or while working part-time.
“There are societal reasons – historically, it was the wife or female partner that was the one who took time off,” he says.
Teachers who take maternity leave beyond the 39 weeks that is paid, for example, will not accrue any pension for the period they are unsalaried.
Part-time workers will not be as badly off as in many other schemes because payments are currently based on their earnings, and the salary used for the calculations is the full-time rate, but they will have earned fewer qualifying days while they were working.
Like every other teacher, I felt that the pension was a delayed pay packet
Helen Foster, 50, is in a senior position at an independent school in the Midlands. She started paying into the teachers’ pension scheme when she moved into working in education in the late 1990s. “Like every other teacher, I felt that the pension was a delayed pay packet,” she says. “You don’t earn a huge amount as a teacher – you do it because it’s a vocation.”
During her two decades in teaching, Foster has had three children but each time took only the basic maternity leave and returned to work straight afterwards. It was only after having her third child that she went back part-time.
She says doing that was “pretty fatal” for her pension. To make matters worse, like many independent schools, hers has pulled out of the TPS after the government increased the contributions that the sector had to make for its employees, so she will be enrolled in a less generous scheme for the rest of her career.
Foster also recently separated amicably from her husband. Despite being the higher earner of the couple now, she says her ex-husband’s pension is much bigger. “Even if I carry on working for the next 10 years and was continuing in the TPS, my pension wouldn’t be as big,” she says.
“There was a change in the TPS around 2015 – if you weren’t a high earner by then and had not accrued much, you can see that your pension will not be as good.”
She believes women are often put off the higher-paid jobs in the profession because “they tend to look at a job description and see what they can’t do, not what they can do”.
She adds: “I’m lucky because I’m quite resourceful – I’m setting up an Airbnb business to bolster my income, and doing some advisory work.”
Netflix and bills: calculating the cash needed in retirement
Extra cash for eating out and a Netflix subscription have been added to an index designed to show how much money people will need to live on when they retire.
The latest figures from the Pensions and Lifetime Savings Association are based on a new list of expected purchases that reflect the UK’s changing pending habits.
The association says that for a minimum retirement living standard, a single person needs a pension of £10,900 a year – £700 more than when the calculations were done two years ago. A couple will need £16,700, it says, a rise of £1,000.
These figures include necessities, plus some social and cultural spending, including a week’s holiday in the UK, a TV subscription and money to eat out about once a month. They do not include cash to run a car.
The moderate retirement living standard figures add a two-week holiday in Europe and some other spending. For a single person the annual pension needed is £20,800, while a couple needs £30,600 coming in.
For a comfortable retirement, where retirees enjoy some luxuries such as beauty treatment and three weeks’ holiday in Europe a year, the association said one person would need an income of £33,600, while a couple would require £49,700.
It added that one in six employees were on track to have an income somewhere between the sums needed for a moderate retirement and a comfortable one.