New pension system will negatively impact young working women shouldering unpaid work

The new pension system will not be beneficial to young working women. Under the new system, the working years of people in their 20s and 30s become very important for pension accrual. And it is exactly during this time that three-quarters of women work part-time, typically to care for children and shoulder other unpaid work, AD reports.

Several pension funds are switching over to the new system on January 1. The new system gives younger employees more pension for every euro contributed than people who are at the end of their career. This will work out well for young men, but not for most young women.

A study by think tank Netspar in 2021 showed that women accrue an average of 40 to 45 percent less pension than men. This is partly due to the wage gap - women’s average hourly wage is considerably lower than men’s. Last year, women earned an average of 10.5 percent less than men per hour. A large part of that gap is because women more often work part-time and are more likely than men to work in positions or sectors with lower wages.

“Ultimately, three-quarters of women work part-time,” Karin Jakobsen, founder and director of BrightPensioen, told AD. “This is mainly because they are more likely to care for children. They also have more informal caregiving responsibilities than men. But all that unpaid work has a negative impact on women’s pension accrual.”

“We consider it normal to share caregiving and responsibilities, but the financial consequences still too often fall on women’s shoulders. This really needs to change if we want to close the pension gap,” Jakobsen said.

According to Jakobsen, it would help if tax benefits weren’t exclusively based on salaries. “If you earn less, you also benefit less. I think this needs to be changed; it would make things fairer," she said. "We live in a society where only paid work is rewarded, but a great deal of unpaid work is also done. That's a flaw. If we also reward unpaid work, we'll achieve much greater financial equality.”

Partners should also offer financial support, she added. “Financial equality starts with discussions at home. If you have these conversations, you can prevent one of you from ending up with a significant pension deficit later in life.”