Covid baby bust: The silver lining

“There’ll be babies,” they said, “Nurseries everywhere full of new babies, thanks to the coronavirus pandemic and lockdown.”

On the surface at least, it made sense. People in high-income countries were home together longer, without the distractions of bars and restaurants, travel, shopping, movie theaters, or even the office. How could they help but have more children?

But as expectations of the Covid baby boom faded, so too did hopes of a reprieve, however temporary, from the long trend of plummeting birth rates in industrialized countries - and the global story of ageing populations.

On a societal level, this is hardly the news we want to hear. However, on an individual level, postponing motherhood could give women a chance to focus on their education and career before starting a family, in turn, narrowing the pension gap between men and women, according to a report by Allianz Research

Birth pains

Since 1956, the number of newborns per year in developed regions has been dropping – from around 19.1 million to 13.2 million in 2020. The birthrate in the U.S. has fallen for six years straight, last year hitting its lowest point since 1979.

While births sink, the age of first-time mothers rises. In 1960, the average mother in Germany was 25 years old when she had her first child – by 2019, she was just over 30. Similar stories are playing out the world over, including in Japan, which is among the countries with the oldest first-time mothers, at an average age of 30.7.

The share of mothers aged 40 or older has also been increasing. In 2019, 5.4 percent of all newborns in the European Union were born to mothers aged 40 or older. In some countries, like Spain, the trend is even more pronounced: almost 10 percent of babies were born to women aged 40 plus in 2019 – twenty years earlier, the number sat at just 2.4 percent.

Number of births in more developed regions (in million)

allianz gender pension gap falling birthrates

Not every late start to motherhood represents a deliberate choice, many factors play into the decision: lack of a suitable partner, instability in relationships or financial situations, advancements in reproductive medicine, higher education levels and the wish to pursue a career before starting a family. Recent U.S. research appears to confirm this: in regions experiencing strong economic growth, the decline in birth rates is much more pronounced than in economically stagnant areas.

Covid didn’t start the fire, but it may have exacerbated the existing trends of declining birth rates and thus aging societies.

The flipside, however, is the potential positive effect on the income and wealth situation of women.

Mind the pension gap

In the European Union in 2019, the average pension for women over 65 was 29.4 percent less than that received by men of the same age group. The gap varied from 2 percent in Estonia to 44.2 percent in Luxembourg. Japan and the U.S. face even broader gender pension gaps, at 47.4 percent and 33.7 percent, respectively.

Increased labor market participation among women does shrink the gap but women continue to be over-represented in part-time work. In 2020, 28.3 percent of all women employed in the EU worked part-time or held temporary contracts; the figure among men was only 6 percent. The Netherlands reports the highest figures: over two-thirds of all employed women and around a fifth of all employed men work part-time. This is significant, as part-time workers or those whose wages are below certain income thresholds often miss out on occupational pension schemes.

When this prevalence in part-time work is combined with enduring income gaps, with the fact that it is most often women who take child-rearing career breaks, and with the financial literacy gender gap highlighted in recent Allianz research, the pronounced delta in pension income levels across most European countries looks set to remain for the time being.

Gender pension gap 2019 and 2010 (in percentage)

allianz gender pension gap

Compounding the issue is the fact that women are often in the dark about their own retirement provisions. In a recent study by Allianz Germany, 59 percent of the respondents neither knew the amount of their future pension payments nor had an overview of possible further income. Only 43 percent expected their standard of living upon retirement to fall slightly or sharply, and a whopping 80 percent were unaware of the existence of a pension gap altogether.

Worsening the situation for women is financial literacy. A recent financial literacy survey by Allianz showed a huge gender gap in all analyzed countries: while 36.4 percent of all male respondents answered all questions related to risk literacy correctly, only 20.7 percent of their female peers did.

"There is little difference between men and women when it comes to knowledge of future pension levels," says Laura Gersch, Allianz Leben's Board Member for Corporate Clients and Human Resources. "However, the effects of this ignorance are serious. Men are much more likely to have unbroken employment histories. As a result, they not only pay into the statutory pension scheme in a more stable way, they also benefit more from company pension schemes and take out private pension contracts for themselves more frequently."

To sum up: While the postponement of motherhood might add further challenges to already rapidly ageing societies, on an individual level, it can potentially have a positive effect on the income and wealth situations of women.

Further efforts, such as facilitating access to supplementary pension schemes and improving financial literacy among women, could help close income and pension gaps over the long term.

The Allianz Group is one of the world's leading insurers and asset managers with around 125 million* private and corporate customers in nearly 70 countries. Allianz customers benefit from a broad range of personal and corporate insurance services, ranging from property, life and health insurance to assistance services to credit insurance and global business insurance. Allianz is one of the world’s largest investors, managing around 764 billion euros** on behalf of its insurance customers. Furthermore, our asset managers PIMCO and Allianz Global Investors manage about 1.8 trillion euros** of third-party assets. Thanks to our systematic integration of ecological and social criteria in our business processes and investment decisions, we are among the leaders in the insurance industry in the Dow Jones Sustainability Index. In 2023, over 157,000 employees achieved total business volume of 161.7 billion euros and an operating profit of 14.7 billion euros for the group.
* Including non-consolidated entities with Allianz customers.
** As of September 30, 2024.

Press contacts

Siân Taylor
Allianz SE
Lorenz Weimann
Allianz SE
As with all content published on this site, these statements are subject to our cautionary note regarding forward-looking statements:

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