An All-Party Parliamentary Group on Women and Work this week discussed the issue of the gender pension gap and what can be done to tackle it.
How can we better ensure that women aren’t forced to continue working into their late 70s and 80s, have little financial independence in old age or face their final years in poverty?
An All-Party Parliamentary Group [APPG] on Women and Work session this week looked at how to reduce the gender pension gap, something our sister site workingwise.co.uk has been campaigning about. Its survey earlier this year found that half of women believe they will not be able to afford to retire at state pension age and 53% say they do not think they will be financially independent in old age.
Rhiannon Byers from The Money Charity told the APPG about the importance of financial wellbeing. The charity offers financial wellbeing workshops at work and in the community and also works with young people in schools. Byers said there had been unprecedented interest from adults due to the cost of living crisis. This year it has launched workshops for women in partnership with charities like the Young Women’s Trust and it is looking to work more closely with employers across the UK who, Byers said, do quite a bit on financial wellbeing generally, but not so much on the particular issues faced by women. These are mainly due to the weight of caring responsibilities that women generally carry and other issues such as the menopause. “It’s an opportunity for workplaces to step up,” she said, highlighting the gender pension gap and the way the gender pay gap increases significantly after women have children as they take career breaks or go back part time or get stuck in low paid jobs.
All of this contributes to the fact that women’s pension pots tend to average £50K compared to £150K for men, she said. Women often lack financial confidence too, added Byers, so the workships aim to build capability as early as possible by focusing on ‘teachable moments’ in a woman’s working life, for instance, before she starts a family when financial discussions on gender issue are crucial.
Jack Jones, a policy and campaigns support officer at the TUC, also spoke about the gender pension gap which stands at around 39.7%, much higher than the gender pay gap. The union Prospect does an annual report, with this year’s report due in the next month. Jones said there were many different approaches needed to address the gender pension gap, from fixing childcare and overhauling Shared Parental Leave to strengthening gender pay gap reporting. The TUC would also like to see a change to the earnings threshold for auto enrollment and the scrapping of the lower earnings threshold which particularly affects women in low-paid, part-time jobs or doing multiple part-time jobs, meaning they don’t save for a pension.
Christine Haswell from the Civil Service Pensions Alliance said employers need to be encouraged to increase their contributions, to continue contributions if an employee takes a career break and to ensure women apply for pension credits to cover career breaks. She would also like to see a change in the policy which means widows who remarry have to give up their deceased spouse’s pension. She said the numbers affected in the civil service are small and the process is “unnecessary, unfair and undignified”. She would also like to see greater awareness of pensions in divorce settlements.
Hetty Hughes from the Association of British Insurers began by emphasising the positive role auto enrollment has had on women’s ability to save for their pensions – for every income level more women are now saving into a pension scheme than men. Men are more likely to opt out. But there is still a lot to do to encourage women to put enough into their pension pots and to apply for National Insurance credits if they are not paying National Insurance for any reason.
The ABI also wants to see pensions shared by default on divorce so people have to opt out if they don’t want to share them. Hughes said women often don’t realise the value of their partner’s pension. She added that the decisions people make on retirement are also crucial, for instance, if they choose to purchase single or joint annuities. If their spouse goes for the former, the woman will lose out if she outlives them. Hughes said the decision should be taken on a household level rather than an individual one. She called too for better education on pensions benefits, such as employers’ ability to match contributions paid above the minimum level. She added that the narrowing of the gender pension gap is happening extremely slowly and that, if we continue on the present trajectory, it will only close by 3% by 2060.
There was a general discussion about other forms of education and awareness raising, including greater awareness of the Pension Wise service which offers free advice on pensions.