The Heller School for Social Policy and Management, Brandeis UniversityNational Program on Women & Aging
Women & Aging Letter
Excerpt - April 2000Women's Stake in the Pension Privatization Debate
Volume 4, Number 4Women and Pension Privatization-- by Sara RixThe proportion of workers with access to private pensions has grown in many countries. However, public pensions continue to be the dominant source of income among the elderly in the industrialized world; their benefits are also typically more generous than those from private plans.
Private pensions do not (and probably cannot) provide the income protection that many public pension systems provide through redistribution mechanisms and targeted benefits that are especially important to women. Women benefit greatly from the redistribution of income that is a feature of many public social insurance schemes.
There are many types of redistributive mechanisms. In the US, the Social Security benefit formula is weighted so that low earners — among whom women predominate — receive a benefit that is a greater proportion of their preretirement earnings than that received by high earners.
Women typically live longer than men. Therefore, the result of using gender-neutral mortality tables is a redistribution from men to women.
Privatized Social Security systems, which cannot efficiently redistribute or target benefits, are designed to promote individual well-being, rather than the common good. Thus, women, because of discontinuous work careers and lower earnings, often reach retirement age with inadequate pension benefits. Without the redistribution resulting from Social Security, they are often forced to turn to means-tested public assistance programs, with all the negatives that implies.
Another provision of particular importance to women is pension indexing for inflation and rising living standards. The greater life expectancy of women underscores the importance of the automatic indexing mechanisms in most public pension schemes, mechanisms typically lacking in private pension plans.
Sara Rix is Senior Policy Adviser at the AARP Public Policy Institute, Washington D.C.
This is an excerpt only
Back to Women & Aging Letter page