The average pension pot of a 65-year-old man is as much as six times that of a 65-year-old woman, rising to nine times for first-time married men and women.
With three quarters of men and women now saving through earnings-related workplace pensions, you might be thinking the Gender Pension Gap will soon be history. Unfortunately, it will not. Without actions to address the root causes, pension parity may not be achieved until as late as 2160. And, since older women outlive older men, rising old age dependency means the consequences of an enduring Gender Pension Gap are not only societal but economic.
Women’s lifetime earnings are just 59% of men’s, a factor of the Gender Pay Gap, itself a combination of lower-paid gendered roles, time out of the workplace to care and part-time and flexible working impacting career progression.
Covid-19 has accelerated changes in the working world and many people are returning to workplaces adopting new hybrid ways of working. As we look forward to greater economic stability and a fairer society, Pensions Awareness Day is a moment for employers and business leaders to reflect on six steps for levelling up their people’s pensions.
- Review employee pension participation and identify gaps to inform staff pensions engagement and wellbeing strategies. Full-time workers are one and a half times more likely to have a workplace pension than part-timers (currently mainly female), highlighting the importance of designing approaches for engaging people with different life circumstances.
- Analyse contribution gaps and consider whether the pension scheme design supports financial fairness. Do contribution tiers offer equal opportunities for pension saving and enable levelling up? Or might they compound the Gender Pay Gap - currently 15.5% nationally - by offering higher employer contributions for higher earners?
- Talk about pensions at work, engage and support staff to understand employer pensions and how they relate to their future. 52% of women and 38% of men in their late 20s say they do not understand pensions. 35% of women - 28% of men - say talking about pensions makes them feel cold. Pensions wellbeing sessions including retirement planning, contributions and tax relief and investment illustrations based on lifestyles can help engage staff and inform their making confident and balanced choices.
- Prompt staff who are considering changing their working arrangements to consider their pensions too. Only half of people say they prepare a pension plan when taking a break from work and just 28% of mothers consider how reducing hours impacts pensions (a 47% part-time pension gap by age 60). Larger employers may provide illustrations, others may direct staff to websites with online pension calculators.
- Support new parents and carers to balance work-life and to make informed pensions choices. Take up of shared parental leave is just 2% partly due to unequal maternity and paternity pay policies. Employers can level up and be transparent about policies for parental and carer leave and career progression for flexible and part-time work. They can also point staff to information about registering for Child Benefit and Carers’ Credit (relevant for state pensions) and tax efficient ways to pay into a non-earning partner’s pension.
- Encourage staff to consider how their pensions saving arrangements reflect their relationships. The Gender Pension Gap for cohabiting and married women aged 30 to 44 years is two thirds and one half respectively. Yet 46% of people do not know that cohabitees and marrieds have different pension sharing rights if relationships break up and half do not know to update records post-separation. Making pensions information relevant to peoples’ lives helps them to avoid unexpected outcomes.
Jane Portas created “6 Moments That Matter” a framework for people and organisations to secure fairer financial futures, one of which is Later Life, Planning & Entering Retirement. She co-founded Insuring Women’s Futures, is a former Big Four Partner and a member of Women’s Business Council.
Note: For all data sources see details in The Risks in Life Series authored by Jane Portas including Living a financially resilient life in the UK (published by Insuring Women’s Futures). See also, Pensions on divorce: where now, what next? Debora Price and Jennifer Buckley, 2021 (median pension wealth age 65-69 years); ONS Employee workplace pensions in the UK 2020 provisional and 2019 final results.
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