This article examines the effects of pension adjustments on gender inequality, focusing on a 10% increase for parents with three or more children that disproportionately benefits men. Three scenarios are proposed to promote fairness: the first offers a flat-rate increase for lower-income women, the second provides progressive increases based on the number of children, and the third combines elements of both. These adjustments aim to narrow the gender pension gap while highlighting existing disparities among retirees.
The Impact of Pension Adjustments on Gender Inequality
The Retirement Orientation Council (Cor) has tasked Drees with conducting simulations aimed at addressing the disparities between men’s and women’s pensions. The focus is on the existing 10% increase allocated to parents of three or more children, exploring various scenarios to promote fairness in pension distribution.
Within the pension system’s framework, a significant solidarity measure is the 10% boost for parents with three or more children. In 2020, this financial incentive represented “8.4 billion euros, accounting for 2.9% of total direct pension rights, and benefitting 39.8% of pensioners, with an average monthly payment of 105 euros,” as noted by Drees in the introduction to a study released on March 13.
However, the increase is proportional to the pension amount, which disproportionately benefits men, who typically enjoy higher pensions than women (averaging 1,964 euros gross compared to 1,668 euros, according to Drees). Consequently, this increase fails to promote equitable redistribution among retirees and does not effectively narrow the gender pension gap.
Scenario A: Enhanced Benefits for Women with Lower Incomes
Overview. This scenario proposes a flat-rate increase of a minimum of 150 euros for those retiring in 2026, replacing the current proportional increase. It maintains eligibility for both men and women with at least three children and distributes the increase based on the pension contributions from each fund, adjusting according to the average salary.
Outcomes. For the 1978 birth cohort, around 17% would see a pension increase of at least 1%, while 11% would experience a decrease of the same magnitude. Notably, 19.7% of women would benefit, particularly among the 20% with the lowest pension rights (with 32.3% gaining). Conversely, 14% of men would face losses, particularly those in higher income brackets (37%).
Pension Values. Women’s pensions would rise by 0.3% to 1,673 euros gross monthly, whereas men’s pensions would decrease by the same percentage to 1,958 euros.
Scenario B: Significant Gains for Women
Overview. This scenario focuses solely on women, providing increases starting from the first child: 3% for one child, 6% for two, and 13% for three or more, capped at 3,000 euros gross annually in 2026, as detailed by Drees.
Outcomes. The simulation reveals that 86% of women from the 1978 generation would gain from this adjustment. Exclusions apply to women without children, those with at least four children, certain public service employees, and individuals subject to the cap on increases.
In this framework, the average pension for women would reach 90.4% of men’s pensions, an improvement from 84.9% under current regulations, thus narrowing the gap by 5.5 points. Yet, disparities would persist: the income ratio between the wealthiest and the poorest 20% of retirees would remain nearly unchanged (0.2 points).
Pension Values. Women would see a 3.3% increase in their pensions to 1,723 euros gross monthly, while men’s pensions would decrease by the same percentage to 1,906 euros.
Scenario C: Improved Distribution with Fewer Winners
Overview. This scenario merges elements from Scenarios A and B by providing a flat-rate increase based on the number of children. The proposed increase would be 40 euros per month for one child, 80 euros for two, and 160 euros for three or more, indexed to the average salary per capita.
Outcomes. Under this model, 81.6% of women born in 1978 would achieve a pension increase of at least 1%. However, it would notably benefit the lowest-income group, with 83.2% seeing a minimum 10% increase (and half of them achieving over a 20% raise). Conversely, the wealthiest women would see negligible increases, capped at 5%.
Moreover, “the relative pension gain would be significantly more pronounced for women with two children compared to those with one,” Drees emphasizes. This approach is particularly relevant as the income disparity between genders typically widens with the number of children.
Pension Values. The average pension for women would rise by 3.9% to 1,733 euros, while men would experience a 3% decrease, maintaining their pensions at 1,906 euros.