MIND THE GENDER PENSION GAP
Although addressing the gender pension gap is a societal and industry-wide issue, there are still some tangible steps you can take to make a difference.
Alison Nicolson - Co-Head of Client Relationships and Sponsor of Inclusion and Equality
Jane Clark-Hutchison - Co-Head of Client Relationships and Sponsor of Inclusion and Equality
It’s often too late when people start drawing their retirement income and discover that it’s significantly below what they need. And for women, the impact is even greater – as on average, women are retiring with £123,000 less than men, and ethnic minority women are less likely to have a pension at all.1 The gender pension gap is further exacerbated as women tend to live longer than men and are more likely to need care during their later life, so they need an additional £85,000 in retirement savings than men for a comparable quality of life in retirement.1
Why is the gender pension gap still so big?
Typically, women are more likely to earn less than men, and have career breaks for caring responsibilities which often disproportionately fall more on women. Additionally, 72% of part-time workers are women.1 This reduction in earnings inevitably has a direct impact on pension savings.
Creating more inclusive retirement outcomes requires action from all. We’re actively lobbying for pension policy reform including introducing higher default contribution rates, and ensuring employer contributions continue even when employees opt out to help more people save adequately. Extending the automatic enrolment mechanism to the self-employed would also help a further 1.5 million women save more for retirement.2
Further action, including lowering the minimum age for automatic enrolment, and scrapping the automatic enrolment minimum earnings threshold could help 1.8 million jobs occupied by women be brought into the pension system.3 Considering pensions in divorce proceedings, and ensuring enhanced maternity pensions retain their pre-maternity levels and replicate salary sacrifice schemes, would also help close the gender pension gap.
What steps can you take to help close the gap?
It’s not just policymakers that can make a difference. As employers, there are also steps you can take to minimise the gender pension gap, starting with your own organisation.
Providing guidance around how taking time out of work for caring responsibilities impacts retirement savings will encourage women to think about their future. One way to reduce impact is creating a supportive culture that normalises shared parental leave. Also consider reviewing your current parental leave package to ensure parents are fully supported before, during and after leave.
The government has already announced plans to make flexible working the default, as the mandatory lockdown order as a result of the Covid19 pandemic taught us that more organisations than ever were able to work flexibly. Flexible working has benefits for both employers and employees – it removes barriers for those with caring responsibilities and promotes a more diverse workforce. 4 Flexible working means you can reach a wider pool of candidates and improve employee satisfaction and talent retention.
Women face unique barriers in the workplace that impact career advancement and fair reward.5 Women are also less likely than men to negotiate salary.6 To address this, you can take steps to regularly review all salaries to ensure your employees are rewarded fairly.
Review your benefits package and assess how you can incorporate enhanced childcare support, as costs for this in the UK are amongst the highest in the developed world.7 You can also provide discount vouchers for essentials and help women direct these savings to their pension.
By ensuring your policies support, promote and advocate for women, you can help close the gender pension gap and work towards fairer and more inclusive outcomes for women in retirement.
We have a wealth of online support including detailed insight to help women better prepare for retirement. Our dedicated hub includes more information about why the gender pension gap exists and provides practical information to help close that gap. Everyone can access education and guidance and can also try our ‘Meet Your Future Self’ tool to find out if they’re on track for the retirement they want.
- According to research from Scottish Widows, 2022 Women and Retirement Report (PDF, 2.9MB).
- According to research from Office for National Statistics, Data and analysis from Census 2021.
- According to research from Office for National Statistics, Pension type by age group and gross weekly earnings bands.
- According to gov.uk, Millions able to request flexible working from day one.
- According to research from Government Equalities Office and The Global Institute for Women’s Leadership, Improving Women’s Progression in the Workplace.
- According to research from Slater and Gordon, UK women too polite to ask for their worth.
- According to research from OECD, Net childcare costs.