There have been exhaustive discussions on the gender pay gap, but what about the huge chasm between women’s pension wealth and what men are able to accumulate for retirement? Nikki Thompson explains.
Moving on from the gender earnings gap, focus on the gender pensions gap is intensifying with new data and commentary appearing on a regular basis.
The latest report this month by the Pensions Policy Institute shows that most damage to women’s pension wealth is done while in their thirties – the general age when women are taking time off work to care for their families. Last year’s research by the Chartered Insurance Institute showed that women have an average defined contribution pension pot of just one fifth the size of men’s at age 65.
But why should employers be concerned, and what can they do about it?
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First, employers invest a huge amount in providing occupational pensions – in many cases, this is the largest proportion of their benefits budget. So they should have an interest in the outcome of that investment.
Second, diversity and gender equality is a major issue on the HR and corporate agenda, and measures that focus on closing the gender pensions gap should be considered amongst a range of other policies, particularly in the context of employee engagement and wellbeing.
Some of the measures can be simple and easy on budgets – for example, adapting employee and member communications. Currently, the way employers and their providers communicate about pension provision can exacerbate the problem – particularly in the light of DC pensions requiring investment decisions.
In our YouGov survey of over 1,000 women, published this month, four out of 10 women do not believe communications about financial products reflect the way they think and feel about money and the same proportion think financial services companies should be more inclusive in the way they communicate with female customers.
Many women (29%) said the way of achieving this is by addressing broader financial issues that women face – such as career breaks, the gender pay gap and the financial impact of being a primary carer.
As employer and provider conversations about savings and investment are still biased towards men, there are opportunities here to help women make the most of their money and provide information and guidance that acknowledges the problems women face.
Consider segmenting communications to include gender: Employer and provider communications often rely on segmentation by age, salary level and seniority but there is a case for adding gender to the list. For example, this approach would have been useful when state pension ages were equalised.
Many women approaching retirement were unaware of, or unclear about the impact of the changes, and a group recently asked the High Court for a judicial review into whether increasing women’s state pension age to be in line with men’s was unfair.
Whether gender segmentation is right for organisations is likely to depend on the existing culture within the company, as well as considerations around resource and the overall communication strategy.
Understand the personal, familial and emotional considerations of saving: Most employee and member communications such as total reward and benefit statements, handbooks, newsletters and email campaigns – as well as modellers – take a uniform approach focused on contributions, income and financial returns.
Communications would benefit from positioning long-term savings such as pensions as part of a bigger picture that takes account of social issues such as family planning, caring responsibilities and divorce. New financial wellbeing portals are well placed to provide some of this information.
For example, talking about what happens to pension contributions when someone goes on parental leave should be as commonplace as talking about de-risking or freedom of choice.
Adapt employee benefits offerings to support women in the workplace: Family and caring responsibilities traditionally impact more women than men, so employers could adapt their benefit strategies to support people, for example with:
- A carer’s allowance
- Part-time workers being able to opt into a workplace pension despite falling below the £10,000 threshold for auto-enrolment
- Spouses /partners being able to pay into contract-based pensions
Some employers will want to take the lead on overcoming the gender savings gap. By adopting new benefits in support of women’s needs, they stand to gain in terms of corporate reputation and engagement among their workforce.
Women’s representation on decision-making boards and committees can influence the focus on benefits and broader financial wellbeing initiatives that help close the gender savings gap.
Organisations need to keep working to ensure they have a fair and appropriate representational structure, which can be done through formal election processes or ensuring women are well represented on engagement committees.
Obviously, the way that we communicate with women about savings and investments is not the only – or indeed the main – issue in solving the gender savings gap.
Until we see more equitable pay, affordable childcare and eldercare provision and a more equal sharing of family duties, women will continue to face challenges, with one of the consequences being reduced pensions in their retirement years.