While great strides have been made to address equality and inclusivity in workplaces across the UK, there’s still one big chasm to close: the gender pension gap.
The topic has been on the table for years. Yet now, according to the first major government study (1) analysing data for men and women between 2018 and 2020, there’s more to be done.
Women’s private pension pots are worth around 35% less than men’s
The gender pension gap is measured by the percentage difference in pension income between women and men.
The June 2023 government study found that, in the UK, women’s private pension pots are typically worth 35% less than those of male colleagues by the time they reach 55.
To help put this in context, researchers concluded that, on average, for every £100 accumulated in men’s private pensions, women have just £65. As a result, women could end up missing out on thousands of pounds of retirement income.
Women often have gaps in earning due to family responsibilities
During their working years, many women experience gaps in earning. In fact, according to a report published by Money Marketing (2), “84% of the 1.75 million people who have recently given up work to care for a family member are women”.
They stop work altogether or reduce hours to raise children or care for elderly relatives – sometimes for years at a time.
This can mean taking on part-time roles or lower paid jobs to balance their career with family responsibilities. The natural consequence being that the pension gap widens – especially if gaps in working also mean gaps in retirement saving and membership of the State Pension scheme.
Automatic enrolment in workplace pensions has helped, but more can be done
Automatic enrolment for workplace pensions, introduced in 2012, has helped to address a decline in private pension saving. For many, it has also helped instil the value of long-term saving.
Yet, although the number of women and men saving into a workplace pension is almost equal, the government survey indicates there is still more that can be done to help close the gap.
5 positive actions employers can take to help narrow the gap
There are a variety of steps employers can take to help minimise the gender pension gap. So, here are five practical actions you could consider.
1. Re-enrol workers into pensions schemes annually
By re-enrolling on an annual rather than three-yearly basis, you can provide employees with an opportunity to re-engage if they have taken career breaks or have opted out because they can’t afford to lose a portion of their salary.
Annual re-enrolment might also allow you to use feedback to understand the reasons why people may decide not to opt back into the scheme. This, in turn, may help you to make proactive changes to encourage more people into the scheme.
2. Ensure employer pension contributions continue for employees during periods of parental leave
Many people may not realise that partners, family, or anyone else can make additional pension contributions on their behalf.
As an employer, you’re in a great position to help highlight this fact. By doing so, you could help your employees to seek additional support from their family and loved ones, which they may not otherwise think to do.
3. Make flexible working the norm from day one and highlight this across all job roles
The mandatory lockdown order due to the Covid pandemic showed that many organisations were able to work flexibly. As a result, the government announced plans to make flexible working the default, in December 2022.
If you wish to make flexible working the norm throughout your business, consider encouraging all employees to be transparent about their working hours.
A company-wide flexible working policy could help to:
- Remove barriers for those with caring responsibilities
- Promote a more diverse workforce
- Reach a wider pool of candidates
- Improve employee satisfaction
- Increase talent retention.
4. Adopt a minimum of 5 days unpaid leave for those with caring responsibilities, and, where possible, 5 days paid carers leave
Women are twice as likely as men to be the main family carer. So, adopting a policy of five days paid carers leave, where possible, can help to support workers needing to care for a loved one without sacrificing pay and pension contributions.
5. Assess workplace health benefits
Review the health benefits you offer, specifically looking at whether they provide explicit and visible support for reproductive conditions such as miscarriage, fertility treatment, and for those diagnosed with endometriosis or managing menopause symptoms.
Should you find that such support isn’t covered in the benefits you provide, we can help you find a more appropriate female-friendly replacement.
These five recommendations could help positive changes to resonate beyond the issue of the gender pension gap, leading to a more inclusive, happy and productive team. There could be additional actions that might be appropriate for your business, too.
Get in touch
If you’d like support in narrowing the gender pension gap in your business or any other matter, please get in touch.
Email info@lebc-aspira.com or call us on 01454 632 495.
Please note
The information contained in this article is based on the opinion of Titan Wealth Planning and does not constitute financial advice or a recommendation to any investment or retirement strategy.
Workplace pensions are regulated by The Pension Regulator.
(1) www.gov.uk/government/statistics/gender-pensions-gap-in-private-pensions…
(2) www.moneymarketing.co.uk/opinion/ros-altmann-when-will-women-get-the-bac…