Older women enter retirement with fewer economic resources than men. Overall, there is a substantial gender gap in all sources of retirement income including pensions, savings and earnings from post-retirement employment. The difference in income from pensions is especially pronounced. Among seniors, women are only about two-thirds as likely to receive income from pensions compared to men. In 2005, 44 percent of men received a pension payment compared with 29 percent of women. 1 Among those who received income from pensions, women’s benefits were only about 60 percent of benefits received by men. In 2005, the average pension benefit for a woman was $10,866 compared to $16,933 for her male counterpart. 2 Participation in a retirement plan is an essential step in ensuring adequate financial resources for retirement. Retirees’ receipt of pension income significantly affects their ability to maintain a standard of living similar to that of their pre-retirement years. This is particularly true for women, who enter their retirement years with fewer resources and with longer life expectancies.

The disparity between women and men’s pension income exists in both pension plan participation and pension account accumulation. This disparity, or gender gap, in pension coverage is largely attributable to the characteristics of women in the labor force. Women spend fewer years in the workforce, are more likely to work in part-time employment, and historically earn less than their male counterparts. Moreover, the continuing shift from defined benefit to defined contribution pension plans presents unique challenges for women.


Part-time workers remain much less likely to participate in an employer sponsored pension plan. 3 Less than one-third of part-time workers participate in a pension plan, primarily because most employers do not offer pension plans to part time workers. Even when they are eligible to participate in a pension plan, workers in part-time jobs earn less per hour than workers in full-time jobs and therefore accumulate less in pension assets.

Women, and particularly married women, are more than twice as likely as men to work part time, either for their entire work lives or for a part of their careers. 4 In 2005, about 25 percent of married women in the labor force aged 25-54 worked part time compared to only 5 percent of men. 5 Overall, women who work full-time are twice as likely to participate in a pension plan as women who work part time. 6 Thus, while part-time work may make it easier for women to participate in the labor force, its lower hourly wage provides less of a reward for doing so, resulting in lower pension plan participation and asset accumulation. 7


Another factor that is favorable to pension plan participation and asset accumulation is the number of years worked and tenure at each job. Because retirement income depends on benefits that accrue throughout one’s working life, more years in the workforce translates to more pension income . This is true of both defined benefit and defined contribution plans. 8 Moreover, length of service is crucial to plan vesting requirements that usually mandate at least five years of employment to earn benefits in a defined benefit plan. 9

On average, women have fewer years in the labor force than men. Over a lifetime, women will spend 27 years in the workforce, compared to almost 40 years for men. 10 Furthermore, women change jobs more frequently than men, 11 making vesting in a pension difficult. One of the main reasons is that women predominantly tend to be caregivers, especially at younger ages when they are primarily responsible for caring for children. At older ages, women generally have the responsibility of caring for elderly parents or older relatives. Up to three quarters of America’s family caregivers are women, taking, on average, 13 years out of the workforce for family care giving. 12 The flexible work that allows women to be caregivers is usually low-waged, with few benefits, especially pensions.

Recently, women’s labor force participation rates have increased dramatically and are approaching those of men. As a result, women’s pension participation rates have increased and, for some cohorts, surpassed those of men. 13 In 2005, 58 percent of female wage and salary workers ages 21-64 participated in a pension plan compared to 55 percent of males in the same category. 14 However, women in or near retirement women age 50 and over in 2005 are part of a cohort of women who, on average, spent fewer years in the labor force than younger cohorts. 15 As noted above, only 29 percent of women 65 or older receive income from a pension . 16 In addition, those women receive less than two-thirds of what men receive in annual benefits. Correspondingly, the gaps in pension participation were significantly larger in the late 1980s and early 1990s. 17 Because of historically lower labor force participation rates and lower pension participation rates, women in the older age group are more likely to receive pension income through their husbands, as spouses or survivors, than through their own savings or employment.


Wages are an important determinant of pension coverage. The probability of pension coverage on one’s current job increases with the wage the worker earns. 18 The more one earns the more income one has to invest in a defined contribution plan and the higher benefit accrued in a traditional defined benefit plan. Because of this, a disparity in earnings will also lead to a disparity in pension asset accumulation.

Working women earned less than men at every level of education and across occupational categories. Although some of this difference can be explained by the fact that women more often work part-time, even in a comparison of year-round, full-time workers, median earnings for women are still only about 77 percent of that for their male counterparts. In 2005 the median income of full-time, year-round male workers was $41,386 , compared to $31,858 for full-time, year-round female workers. 19Because women have less attachment to the labor force and earn less, they are less likely to end up with a pension . 20 When they do, that pension benefit is likely to be smaller than a man’s an average of $16,933 for a man compared to $10,866 for women .


There is a well established and consistent trend away from defined benefit plans to defined contribution plans. Between 1975 and 1993, the number of workers in defined contribution plans grew from 12 million to 44 million, while participation in defined benefit plans grew at a slower rate, increasing from 33 million to 40 million employees. 21 By 2004, 80% of workers participating in a retirement plan were in a defined contribution plan, up from 38% in 1983. 22 This shift mirrored the decline of traditional defined benefit plans, which covered 37% of participating workers in 2004, down from 88% in 1983. 23

The shift to defined contribution plans pose risks for both men and women. Traditional defined-benefit pensions and Social Security take the form of lifetime annuities, which provide retirees a monthly check for life. In contrast, 401(k) benefits typically take the form of lump sum payments, which can result in retirees outliving their savings. 24 Individuals who wish to annuitize generally must do so in the private market where annuities can be prohibitively expensive 25 and payouts are lower due to a healthier mortality pool. 26 Moreover, the employer bears the investment risks in a defined benefit plan whereas individual workers bear the investment risks in a defined contribution plan. Although women benefit from the portability of defined contribution plans because they tend to move in and out of the labor market more frequently than men, such plans pose unique challenges for women in retirement.

As women tend to live longer than men, their 401(k) balances must provide an income stream over a longer stretch of time. Women desiring longevity insurance in the form of an annuity, however, face the disadvantage of having to purchase products priced using gender-distinct mortality tables instead of the implicit gender-neutral nature of the defined benefit annuity structure. Given the longer life expectancies for women at retirement age, 27 this can amount to an appreciable decrease in retirement income.

Furthermore, the practice of allowing lump sum withdrawals has negative implications for women. Women are less likely than men to re-invest a lump sum payment of a pension received when leaving a job. Considerably fewer women than men rolled their lump sums over into another investment earmarked for retirement. 28 Women also lagged behind men in re-investing the funds in other savings vehicles such as savings accounts, stocks, bonds, or the purchase of a home; 27 percent of men compared with 23 percent of women re-invested their lump sum in one of these other savings vehicles. 29


Despite gains over the past two decades, a gender gap in pension plan participation and coverage remains . Gender differences in pension wealth arise because men and women have different personal and job characteristics. Women spend fewer years in the workforce, are more likely to work in part-time employment, earn less than their male counterparts, and have longer life expectancies. Closing the gender gap in pension coverage and assets can be achieved by addressing the aforementioned characteristics. Federal policies to increase womens’ pension participation could be achieved by encouraging the extension of pension coverage to part-time work, encouraging more employers to offer pension plans, requiring employers to allow employees to vest in pension plans more quickly, and protecting women’s retirement income from other sources.


Crediting Service for Time Taken Off Under the Family and Medical Leave Act

Length of service determines when an employee can join a plan, when the individual becomes vested, and when benefits may be paid. On average, women have fewer years in the labor force than men primarily because women are more likely than men to take time out for child rearing and other care-giving responsibilities. This can make it hard for women to satisfy plan vesting and eligibility requirements. An option to address this issue would allow workers who take time off under the Family and Medical Leave Act to count that time toward meeting vesting and service requirements. The availability of family leave and the mandate to credit service during that leave would better suit caregiving needs.

Expanding Joint and Survivor Annuity Options at Retirement

Because of historically lower labor force participation rates and lower pension participation rates, women are more likely to receive pension income through their husbands, as spouses or survivors, than through their own savings or employment. In addition, women have a longer life expectancy than men, making them more reliant on survivor benefits. Therefore, expanding the options available under the survivor protections of certain retirement plans to allow larger payments for widows and widowers would likely benefit women.

Amending 401(k) Plan Coverage Rules for Long-Term, Part-Time Workers

Part-time workers remain much less likely to participate in an employer sponsored pension plan. Under current law, employers can generally exclude part-time employees who work less than 1,000 hours per year from coverage under a defined contribution plan. This rule can exclude long-term, part-time employees from adequately preparing for retirement. In particular, this rule penalizes women who far more likely than men to work part time, either for their entire work lives or for a part of their careers. One option would require employers sponsoring 401(k) plans to allow part-time employees to participate in the plan if they work at least 500 hours of service per year for three years. Requiring employers to include long-term, part-time employees provides a vehicle for retirement savings for these workers, many of whom are women, who work part-time on a more permanent basis.

Repeal of Social Security Integration

To the extent that women will continue to receive less income from pensions than men, protecting and improving women’s retirement income from other sources takes on greater importance. Employer-provided pension plans often account for Social Security in their benefit formulas practice known as integration thereby reducing pension benefits . Pension benefit reductions due to integration make it more difficult for lower-income workers to attain retirement income security. The majority of these workers are women and minorities. Therefore, a proposal to eliminate pension integration with Social Security would increase the amount of assets held in employer-provided pension plan

EBRI Fast Facts: Pension, Annuity Income: Differences between Men and Women (March 2007). Based on the March 2006 Current Population Survey, conducted by the U.S. Census Bureau.

Ibid .

Lois Shaw and Catherine Hill, The Gender Gap in Pension Coverage: Women Working Full-Time Are Catching Up, But Part-Time Workers Have Been Left Behind.

U.S. Department of Labor, Bureau of Labor Statistics. Charting the U.S. Labor Market in 2005 , Chart 5-5: Women continue to be more likely than men to work part-time.

Alicia Munnell, Earnings and Women’s Retirement Security , Center of Retirement Research at Boston College (January 2007).

Lois Shaw and Catherine Hill, The Gender Gap in Pension Coverage.

Females’ lower probability of participation in the aggregate was a result of female workers’ overall lower earnings and/or lower rates of full-time work in comparison with males. See Jack VanDerhi, Gender Disparities in Retirement Security , Written Statement for the U.S. Senate Special Committee on Aging Hearing on Bridging the Gender Gap: Eliminating Retirement Income Disparity for Women (March 15, 2006).

In traditional defined benefit plans, benefits are typically determined by a formula that weighs final salary and years of service.

William Waitrowski, Improving Retirement Security for Women (1999).

10 The average woman spends 15% of her working years outside the workforce caring for children and elderly parents . Cindy Hounsell, What Women Need to Know About Retirement: Women and Retirement Income , WISER (April 2007).

11 Stephen J. Rose and Heidi I. Hartman, Institute for Women’s Policy Research Report , Still a Man’s Labor Market: The Long-Term Earnings Gap, 2004.

12 Family Caregiver Alliance , Women and Caregiving: Fast Facts and Figures (May 2003). Metropolitan Life Insurance Company Balancing Caregiving with Work and the Costs Involved (1999).

13 Hence, the aggregate pension and annuity recipiency for women and the amounts they receive are likely to increase over time as these younger generations retire. EBRI Notes, Retirement Annuity and Employment-Based Pension Income Among individuals Age 50 and Over: 2005 (March 2007).

14 Jack VanDerhi, Gender Disparities in Retirement Security.

15 EBRI Notes.

16 only 21 percent of women 65 or older receive income from their own pension

17 For example, in 1987, 40.7 percent of female wage and salary workers ages 21-64 participated in an employment-based retirement plan compared with 51.0 percent for males. In 1992, , 53 percent of female wage and salary workers ages 21-64 participated in an employment-based retirement plan compared with 60.0 percent for males.

18 Richard Johnson, The Gender Gap in Pension Wealth: Is Women’s Progress in the Labor Market Equalizing Retirement Benefits , Urban Institute (1999).

19 U.S. Census, Income, Poverty, and Health Insurance Coverage in the United States : 2005 (August 2006). See Table 1. Income and Earnings Summary Measures by Selected Characteristics: 2004 and 2005.

20 Alicia Munnell, Earnings and Women’s Retirement Security.

21 Lois Shaw and Catherine Hill, The Gender Gap in Pension Coverage.

22 Alicia Munnell and Annika Sundén, Coming Up Short: The Challenge of 401(k) Plans, Center for Retirement Research, Boston College (2005).

23 Ibid. The totals sum to more than 100 because some workers participate in both kinds of plans.

24 Few 401(k) plans offer lifetime annuities. In 2005 only 20 percent of surveyed employers that offered a 401(k) plan offered an annuity option to retirees, while 100 percent offered a lump-sum distribution option. Only 6 percent of retirees who were offered an annuity option in their 401(k) plan chose to take that option. Hewitt Associates LLC, Survey Findings: Trends and Experience in 401(k) Plans: 2005

25 Annuity premiums the cost of a given stream of income are in principle a function of bond yields and can, as a result vary considerably over time. This variability creates additional risk for the defined contribution plan participant over and above the investment risk he confronts during the accumulation phase. G.A. Mackenzie and Allison Schrager, Can the Private Annuity Market Provide Secure Retirement Income? IMF Working Paper (December 2004).

26 Mortality differences between annuitants and the general population reduce annuity payouts by about 10 percent, and that other cost factors reduce payouts by an additional 5 percent. See O. S. Mitchell, J. M. Poterba, M. J. Warshawsky, and J. R. Brown , New Evidence on the Money’s Worth of Individual Annuities.

27 Women have a life expectancy at 65 of 19.6 years compared to 17 for men.

28 27 percent of women compared with 36 percent of men. See Lois Shaw and Catherine Hill, The Gender Gap in Pension Coverage.

29 Ibid.