The Gender Pension Gap in Germany – Reasons and Remedies

Niessen-Ruenzi, Alexandra; Schneider, Christoph

Abstract

A substantial gender pension gap in Germany of about 26% on average (only considering the statutory pension scheme) still exists. The explanations for this substantial gap are multifaceted and therefore also need to be tackled by different policies. Two of the main reasons for the gender pension gaps we identify are (1) the “motherhood penalty,” which manifests in more part-time employment and less career opportunities for women after having children. This leads to lower income and subsequently lower wealth. (2) the “gender investment gap,” which describes women’s reluctance to invest in the stock market, reducing their asset returns. Eliminating the motherhood penalty requires long-lasting social change towards equal attitudes to working mothers and fathers, more full-day childcare facilities (also for young children), and eventually a more equal distribution of paid work and care work among women and men. Eliminating the gender investment gap requires financial education. Women need to become aware of the gender pension gap and they need to actively get engaged with financial planning and wealth accumulation for their retirement.