As of: March 28, 2024, 1:14 p.m
By: Bleranda Shabani
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Women are at a significant disadvantage when it comes to pensions. This often leads to poverty in old age. Preventive measures can help here.
The unequal pay between men and women has far-reaching effects on financial security in old age. With a gap of a full 30 percent when it comes to men's risk of poverty, older women are more likely to experience poverty in old age
Gender inequality in retirement
The gender pension gap, the gap between the pensions of women and men, is on average 30 percent. This is reported by the
Federal Statistical Office.
If a woman does not receive a widow's pension, this difference increases to 40 percent.
The pension gap is based on the same causes as the gender pay gap in working life: women often have interruptions in their careers, choose professions with lower incomes and pursue different careers. They are more likely to be responsible for raising and caring for children, reduce their working hours or even stop working altogether.
So women work significantly less than men - which means they also earn less. You pay less into the statutory pension and save less in private pension products. As a result, they have less money available as they get older. According to the
Federal Statistical Office,
one in five women was at risk of poverty in 2021 (20.9 percent).
One in five women was at risk of poverty in 2021. (Symbolic image). © IMAGO/Michael Bihlmayer/Bihlmayerfotografie
How women can take precautionary measures
First and foremost, women should get a detailed overview of their financial situation, create budgets, build up reserves and find out about investment strategies. The German pension insurance offers a comprehensive service for this. Retirement planning advisors are available at the advice centers who not only shed light on state pensions, but also company and private pension aspects.
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In addition, a woman should never leave financial matters to her partner alone. In the event of a separation, a pension settlement is often not enough. It's important to strive for financial independence, regardless of relationship status or partner. This means actively taking care of your own finances, earning money, saving and investing.
It is definitely worth taking a look at state-sponsored company pensions. The creation of a company pension is given tax advantages, particularly for women with low incomes.
Ways to achieve financial security in old age
Stock funds
- unknown territory for many. However, it is worth looking at the different investment options. ETFs are usually the preferred choice. They are characterized by their cost-effective structure, have achieved solid increases in value in the past and are comparatively easy to understand. Even small savings plans can be useful here.
The Riester pension
offers some important advantages, especially for women with low incomes and children. First of all, government subsidies are a crucial factor. These allowances and, if applicable, tax advantages can help build long-term assets that increase financial security in old age.
Another plus point: flexibility. Especially for women who may have phases with reduced or interrupted income, the Riester pension offers the opportunity to adjust contributions accordingly or even temporarily suspend them - without losing government funding.
Furthermore, the
German pension insurance
offers an additional option for provision. Training times can be upgraded through voluntary contributions. They can also serve to compensate for reductions in early retirement, so that pensioners are not faced with financial losses despite early retirement. Another advantage: the contributions are tax deductible.
Avoid mini-jobs
For women, mini-jobs are often the only temporary solution. But working exclusively in them can be problematic. They only offer small pension contributions. Employment subject to social insurance contributions should therefore be preferred. This gives women full access to benefits such as pension insurance, health insurance and unemployment insurance, which can significantly improve their financial security in old age.
Part-time jobs with lower salaries have lower social security contributions up to a certain limit - the contributions are usually calculated as a percentage of the salary. Since part-time employees have a lower income, their contributions are correspondingly lower.
Enforcing fair wages for women
The gender pension gap is due to the gender pay gap. Women - with the same education, the same references and for the same work - often earn less than men. Women are encouraged to talk to their employer and claim a fair wage. In this way, individual injustice can be counteracted and a better pension perspective can be achieved in the long term.
However, it requires a coordinated interaction of political, economic and social measures to close the gender pay gap and thus reduce the gender pension gap.