The government should introduce a legal duty for employers to inform staff on the impact changes to their working hours and earnings may have on their pension, a think-tank has said.
To help narrow the gender pension gap, Phoenix Insights said employees need help to understand how their working hours and earnings impact their pension savings; particularly as a third of women reduce their hours for an extended period.
Its Caught in a gap report, produced in conjunction with the Institute for Employment Studies, found that life events including motherhood, menopause, divorce, childcare, menstruation and caring responsibilities can all disproportionately affect a woman’s earnings, and therefore pension contributions.
However, many women do not receive enough information about the impact these events have on their pension pots. Fifty-five per cent said they would like more information about their workplace pension from their employer.
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Separate research from the think-tank also found 20% of women have opted out of a workplace pension scheme, 36% of whom did not consider the impact it would have at retirement.
Women on average contribute a larger proportion of their salary to their pension, but by middle age, men are paying almost £80 more per month into their pension pots.
Women are also more likely than men to fall under the auto-enrolment threshold (35% vs 11%) and are more likely to become economically inactive due to a long-term health condition.
The latest report in the series, which looks at the role of government in helping women build better pensions, recommends that the legal requirements around pension communications are expanded, so that employers have to provide information about how contractual changes could affect savings.
The auto-enrolment threshold should also be reduced to 18 years of age, the report says, and the earnings threshold reduced to £0.
Other recommendations include making free Pension Wise appointments available to everyone, not just the over 50s; revisiting the carer’s leave bill to ensure that working carers can access up to 10-days of statutory paid leave; and bringing in the right to request flexible working from the first day of employment (which the government has recently confirmed), but reducing the number reasons an employer can reject this from eight to two.
Phoenix Insights director Catherine Foot said: “Women are being left behind in their pay and pension saving at key life stages and decisive action is needed to reform current policies and practices to support businesses and individuals in addressing saving inequality.
“Efforts should be focused on improving pension policy, providing better support for employers and introducing legislative protections for women at life events. We have identified key recommendations for these areas, including better pension accessibility and information, boosting financial literacy, and improving access to care and flexible working.”
Abbie Winton, research fellow at the Institute for Employment Studies, said: “If the current and future governments fail to act on the gender pension gap, we can be certain that increasing numbers of women will receive an income at retirement which will fail to allow them to meet their basic needs.
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“Legislative changes, particularly around the removal of auto-enrolment thresholds, widening access to advice, improving the affordability and accessibility of child and social care, and rights to flexible working, are all critical to allow individuals to take control over both their working lives and their ability to save in a way that works for them.”
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