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An All-Party Parliamentary Group meeting heard of the key points in women’s working lives which contribute to the gender pension gap and what women, employers and policymakers can do about it.
The gender pension gap is significantly higher than the gender pay gap and yet gets much less attention. An All Party Parliamentary Group on Women and Work shone a sharp spotlight on it this week as speakers such as Jane Portas, Co-Founder of Insuring Women’s Futures, outlined the various stages in women’s working lives which, added together, lead to a 40.3% gap in women and men’s retirement earnings.
Insuring Women’s Futures has identified 12 key financial risks in women’s life course that contribute to the gap, starting from the gender pay gap for women apprentices and the fact that women graduates are not studying for the degrees which lead to higher paid jobs in addition to being paid less for the jobs they do on graduation to the impact of caring responsibilities [for children and other relatives] on hours worked and pay, with low-paid women who work reduced hours falling out of the auto-enrollment pension scheme. Portas said less than a third of women think of the pension implications of reducing their hours after having children.
Other issues which impact women’s pensions are divorce [pensions sharing is not part of divorce settlements], being a single parent [women being more likely to have to raise children on their own] and domestic abuse. Women also tend to live longer and to have higher care costs, said Portas.
She added that Covid would make things worse for women. Research already showed that girls are helping doing chores at home more than boys, setting patterns for the future, young women are more worried about their finances and the future than men, sectors where younger women predominate have been hard hit, women have been reducing their pension contributions more than men, women are less likely to marry due to Covid and to spend longer co-habiting, divorce and separation is becoming more common, domestic abuse has increased and women have been more impacted by childcare issues, which also affected their mental wellbeing. Portas said these issues and more are likely to contribute to it taking even longer for women to reach pension parity with men.
She said employers could take note of the significant points in women’s working lives when they could give them access to advice that might improve their financial wellbeing, for instance, when they are re-entering the workforce after a career break or maternity leave in a similar way that some provide targeted support for people coming up to retirement.
Stephanie Fitzgerald, Head of Young People Programme at The Money Charity, said financial education is vital from an early age and throughout people’s working lives. That would help empower women to take action to increase their pension savings and negotiate higher pay settlements. She added that this would also raise men’s awareness of the issues for women and encourage couples to talk about the pension impact of decisions made about caring responsibilities.
Talking about money from an early age makes people more confident about it and more able to ask for help if they need it, she said. Fitzgerald added that it is important for employers to make the most of the key times in people’s working lives when they might be more open to taking advice on financial issues, for instance, when they are facing major life changes. She added that it is in employers’ interest as stress about money affects employees’ productivity and wellbeing.
Charles Cotton from the Chartered Institute of Personnel and Development said research showed that Covid is having a disproportionately negative impact on women’s financial wellbeing. He also pointed out that financial worries impact productivity, yet he said the majority of employers don’t have a policy on financial wellbeing. This is for a variety of reasons, for instance, senior managers don’t see it as a priority, don’t have the resources or think it is not a priority for employees or that it will not have much impact.
In addition, he called on employers to contribute to financial wellbeing by paying the living wage, which he said would bring higher productivity and improve engagement and retention. He also called for more fairness when it came to pay through pay audits and support for line managers in having difficult conversations about legacy pay issues. Many employers don’t have a definition of fair pay, he said, so are unable to explain their pay decisions. Technology could help them dig out data and trace patterns of potential unfairness. A quick win, he added, is to signpost employees to places where they could get financial support.
The meeting also heard from pensions minister Guy Opperman who said auto-enrollment had been “a game changer” for women as it means many more are paying into pension pots than in the past – even if, it was pointed out, they tend to be paying significantly less in than men because of the earnings gap. Opperman also spoke about the Government’s support for private companies to introduce midlife MOTs and the way the pensions dashboard, which brings all people’s pensions together in one place, could transform people’s lives. The dashboard has been delayed, but Opperman says individuals can access a pensions tracing service instead or consult specialists.