Do Men and Women Receive the Same Amount of Pension Benefits?

March 20, 2014

Women tend to receive less in pension benefits because they spend more time outside the workforce than men, says Matthew Chingos, a fellow in the Brookings Institution's Brown Center on Education Policy.

Do pension systems reflect equal pay for equal work? Chingos notes that women tend to live longer than men and collect benefits for more years. However, women also spend time out of the workforce, and pensions tend to reward the most long-term employees.

Comparing national workforce participation data with Ohio's pension plan (he chose Ohio because the state has well-documented data and its pension plan is a typical one), Chingos estimated the retirement benefits that would accrue to college-educated teachers with careers reflected in the national dataset.

  • Using these figures, Chingos estimated how average benefits might differ between men and women for a given worker group.
  • He looked at pension benefits as a percentage of lifetime earnings, in order to adjust for different career lengths, and used the same amount of lifetime earnings to measure "equal work."
  • Benefit rates for men and women were very similar at ages through the early 50s (and in fact, very slightly higher for women), but at age 55, benefits spiked much higher for men than for women.
  • Fifty years old is the age at which Ohio teachers become eligible for early retirement. At age 55, the average man will receive a pension benefit worth 23 percent of lifetime earnings, compared to 19 percent for the average woman.
  • Were women to receive that additional 4 percent in benefits, it would be worth about $70,000 in 2014 dollars.

Why these differences? Mainly because women are more likely to spend time outside of the workforce than men are. As a result, defined-benefit pension plans -- which tend to provide higher rewards for longer years of service -- will end up paying more in benefits to the person who works more. In Chingos' data, the average man worked for 96 percent of the years included in his analysis, while the average woman only worked 75 percent of those years.

Source: Matthew M. Chingos, "Do Public Pensions Provide Equal Pay for Equal Work?" Education Next, March 13, 2014.

 

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