The Gender Gap in Pension Savings: Evidence from Peru's Individual Capitalization System

This article studies the gender gap in pension funds in Peru, a country where the main pension system is based on individual retirement accounts. We use randomly selected samples of individual administrative pension fund records, collected between 2005 and 2019. The results show a gender gap in favor of men at each percentile of the distribution of pension funds. The unconditional gender gap decreases along the percentiles until it reaches a form of “glass ceiling” around the 85th percentile, and then increases substantially. We also detect heterogeneity by birth cohorts, with older cohorts showing larger gender gaps in pension savings because of the capitalization process. Moreover, we find that awareness about pension fund risk management—used as a proxy for financial literacy—increases the dispersion of pension savings over the distribution, therefore increasing inequality and the gender gap. This situation is aggravated by the fact that Peru has very low levels of financial literacy.