The difference between men’s savings at retirement and women’s is 40 percent – much higher than the gender pay gap, highlights Catherine Foot.
Why is this and what can employers do to help? Catherine Foot, Director of longevity think tank Phoenix Insights, highlights how employers are in a unique position to support women’s finance in the workplace and can play a significant role in closing the gender pension gap.
Many of us will be aware of the gender pay gap, with male and female earnings disparities widely publicised. But while women are falling behind men in terms of their earnings, there is another less well-known gap that is significantly affecting the outlook of women’s long-term finances. This is the gender pension gap.
With women on average living longer than men, the gender pension gap presents a huge challenge for our society as millions of women face up to the prospect of a shortfall of money in retirement.
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We have partnered with the Institute for Employment Studies (IES) to explore this challenge. The research uncovers the driving forces behind the gender pension gap from the lens of the workplace and identifies the inequalities that limit women’s ability to save.
Why do employers need to act?
Employers play a vital role in helping women save for retirement and addressing the gender pension gap. We found over half of women would think more about their long-term finances if their employer engaged with them on their pension. Three-quarters of women also said it should be a legal requirement for their employer to inform them on how pension contributions are affected when faced with decisions around changes working patterns.
This presents a huge opportunity for businesses. Many of women we surveyed said they didn’t think about the long-term financial impact when considering reducing their working hours, so targeted pension communications that inform employees will provide greater pension awareness.
But it’s not just information. Employers play a critical role in supporting women’s finances during life stages as well. The graph below shows the average monthly gap in workplace pension contributions between men and women throughout a working life, mapped against some key life events women can face.
We begin to see women’s pensions contributions fall behind men in the mid-20s, increasing with age, and peaking between the ages of 45-54, around the time working patterns may change due to menopause or more care responsibilities.
In order to enact real change through the workplace, employers should offer enhanced support during these life stages when women need it the most. In doing so they will help them remain in paid employment, minimise the gender imbalance in earnings and maintain their ability to save.
How can employers best offer this support? Based on the insight from our research with IES, we have created five key recommendations we hope employers will act on.
How employers can better support women through work and into retirement
1. Re-enrol workers into pensions schemes annually, rather than the statutory three years. This gives workers the opportunity to re-engage if they have taken career breaks or have opted out because of a lack of affordability. Re-enrolling workers annually should also present a window for employers to understand the reasons why people may choose not to opt back into the scheme and allow them to act accordingly.
2. Ensure employer pension contributions continue for employees during periods of parental leave. Employers should also highlight to all employees that partners, family or anyone else, can make additional contributions to support, especially as they may feel unable to themselves. Throughout all life stages, employers should aim to set contributions at a level that will enable employees to achieve a good standard of living at retirement.
3. Adopt a minimum of five days unpaid leave for those with caring responsibilities. With women twice as likely as men to be informal carers where possible, employers should adopt five days paid carers leave so they can continue to both care for a loved one without sacrificing pay and pension contributions.
4. Make flexible working the norm from day one and highlight this across all job roles. While it is encouraging to see the government introducing right to request flexible working from day one, to ensure this is impactful measures employers can adopt include encouraging all employees to be transparent about their working hours, encouraging senior male employees to visibly adopt flexible working, allowing for flexible working contracts to be changed more than every year and encouraging flexible working discussions at line management meetings.
5. Ensure workplace health policies offer explicit and visible support for reproductive conditions such as miscarriage, fertility treatment, and for those diagnosed with endometriosis or managing menopause symptoms. Examples of ways this can be implemented include access to flexible working and paid leave for the management of symptoms but could also cover other adaptations that could be raised through job redesign.
The cost-of-living crisis has piled further pressure on people’s ability to save for retirement so without meaningful change to address the gender pension gap we could see a widening of financial inequalities. Where they can, employers need to implement these recommendations to support women’s financial futures through the workplace.
Alongside cross-department government action, reforms to policies and practices will go a long way to closing the gap and enable women to take control over their working lives.
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Catherine Foot is Director of Phoenix Insights.
Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.
- Amelia Brand
- Amelia Brand
- Amelia Brand
- Amelia Brand
