Gibraltar government begins process of equalising the State Pension age

Sovereign Pensions Services (SPS) is pleased to hear that the process of equalising the pension age in Gibraltar has finally been initiated with the issue of the Social Security (Open Long-Term Benefits Scheme) Act (Amendment No. 2) Regulations on 22 December 2022.

State retirement age in Gibraltar is currently 60 for women and 65 for men, despite the life expectancy for women being 83 and for men being 79. This leads to a life expectancy / state pension difference of 23 years for females and 14 years for males – a clear gender discrimination and unequal treatment.

For the past 33 years in Gibraltar, this recognised discrimination has been partially addressed though the ‘community officer allowance’, a social wage that was introduced to compensate males from age 60 until they reached state retirement age at 65. This was a ‘patch’ rather than a solution, however, and there were protests on the Rock when the qualifying criteria were tightened in 2020.

A similarly unequal system operated in the UK until 1995, when the UK government equalised the State Pension age because, it said, women were increasingly playing an equal role to men in the economy and people were living longer and healthier lives. It decided then that a common pension age of 65* would strike a fair balance between generations.

The Gibraltar government has made commitments to equalise State Pensions at 60 in its last three election manifestos and SPS, as the largest pensions provider in Gibraltar, welcomes the news that this process is finally underway for the following reasons:

• The pension age for men and women should be the same to promote gender equality and to end the current discrimination and unequal treatment.
• Life expectancy has increased in recent years, which means that both men and women will spend more years in retirement and will need to have sufficient savings to support themselves during this time.
• Many people continue to work after the age of retirement and equalising the pension age for men and women will encourage greater workforce participation among both genders. This means they will contribute to the economy for longer, which will help to address the challenges of an aging population.
• Having the same pension age for men and women will make it easier for people to plan for their retirement and make informed decisions about when to retire and how to save for the future.

The new regulations amend the Social Security (Open Long-Term Benefits Scheme) Act 1997 to state that “the process of the equalisation of” pension ages should “be commenced” no later than 31 December 2022.

“Provision may be made by regulations made by the Minister, for amending the definition of ‘pensionable age’, provided that the effects of such provision shall be that, with effect from the Equalisation Date, the process of the equalisation of the pensionable ages of men and women insured under this Act shall be commenced,” they read.

There will now have to be a discussion around deciding on a State Pension age that will apply equally to both genders and how the equalisation process is to be achieved in the fairest way possible.

By way of example, the UK Pensions Act 1995 provided that women born before 6 April 1950 would retain a State Pension age of 60, women born after 5 April 1955 would have a State Pension age of 65 and women born between 6 April 1950 and 5 April 1955 would have a State Pension age of between 60 and 65, depending on their birthday.

To assist Gibraltar employers of any size to meet their new ‘auto enrolment’ pension obligations under the Private Sector Pensions Act, Sovereign Pension Services (Gibraltar) can design and set up Occupational Pension Schemes that will satisfy all the criteria. We also have the capacity and expertise to manage these pension plans on behalf of Gibraltar employers, such that clients can be assured of the maximum business benefit and the minimum business disruption.

Please contact SPS for further information on how we can assist your business to create the most compelling benefits package to meet the expectations of your employees.

* It may be worth noting that having settled on a State Pension age of 65 for men and women in 1995, the UK Pensions Act 2007 has subsequently provided that the UK State Pension age will be increased to 66 between 2024 and 2026, and then to 67 by 2036 and 68 by 2046.