May 13, 2016

Rosa Scappatura: On Europe’s gender retirement challenge

Written by: Rosa Scappatura | Managing Director, Corporate Trust Platinum Client Management, BNY Mellon in Brussels

Rosa Scappatura

Rosa Scappatura

Whilst strides are being made when it comes to gender pay equality across Europe, there is another ‘gap’ which is talked about less and arguably needs equal attention, and that is the gender retirement gap.

I recently chaired a panel discussion in Brussels looking at the retirement challenge we each face. All European countries are grappling with how to ensure their citizens have sufficient income when they have retired. Traditional European pension systems, even Belgium’s which historically has been one of the more generous systems in the region, are under strain as the percentage of those retired steadily increases.

There is a heightening need for individuals, men and women, to save for their own futures and I’m concerned about how younger generations are able to address this.

If we look at those in their 20s and 30s today, individual expectations about what they expect from their careers are changing. For example, new generations want flexible working conditions and have different wants at different stages of their career. For women, it could be going part-time or taking a career break to take care of family, possibly children. But what impact is this having on their ability to save for their futures? These factors often translate to reduced earnings and, as a result, lower long-term retirement savings.

And of course, there are statistics that suggest that on average, women tend to outlive men by five years, making the need for women to save for their retirement all the more vital.

Data from the World Health Organisation states the current average life expectancy of women in Belgium is 83; for men it is 78. And according to the Financial Services and Markets Authority, the retirement age of women in Belgium averaged 64.29 from 2009 until 2015, marginally below the official state retirement age of 65. Meaning, in theory, Belgian women need to save for a retirement period of circa 18 years plus versus 13 years plus for men.

Life expectancies continue to rise and as a result, most Belgians now expect to need to work beyond the official retirement age. This poses challenges for everyone.

Financial literacy is an essential life skill. It’s high on the policy agenda in some European countries and improving financial literacy levels is something many financial institutions, like BNY Mellon, regularly champion. I’m wondering if policymakers need to advance this further and increase attention on educating young people about the need to start saving for their retirements as soon as possible. Start the retirement conversations in the schoolroom so the seeds are sewn early.

Europeans need to start saving for their retirement as soon as they can. But I wonder if the younger generation understands the gravitas of the financial threat to their futures in later life, and if they do understand, are they simply unable to address the issue due to the range of pressures they face in their life today? It’s a societal issue first and foremost, but one with slightly greater consequence for women.

My colleagues in the United States published a report in March to coincide with International Women’s Day exploring this issue in a report called: The Retirement Challenge: Dilemmas and Decisions Through Every Decade. If you are interested in learning more about the retirement challenges of women at different stages in their life, the report is an interesting read and can be downloaded here.




Louisa Bartoszek
+44 20 7163 2826