5 top tips for employers to close the gender pension gap

A pay gap means a pension gap is inevitable, but there are steps employers can take to help make it smaller and reduce the impact on women

While there is a gender pay gap, there will always be a gender pension gap. Whether we’re talking about defined benefit or defined contribution schemes, the end benefit or contributions paid in are going to be less for women.

And, of course, in DC schemes, the amount of money paid in has the biggest impact on eventual pot size – the less money being paid in, the smaller the pot.

According to Cushon research, men contribute one-third more into their workplace pension than women.

Although salary is a big contributor to the gap, there are other issues that add to the problem. Some of these need to be addressed by the government, but, for the rest, employers can do more.

Top tips for closing the gap:

1. Encourage women to join the pension

Women are more likely than men to have multiple part-time jobs and under current regulations that means they’re more likely to not meet the minimum salary requirements in any one job and so don’t get auto-enrolled.

And of those women who do have a pension, one in two are only in one because their employer put them in.

Until we can convince the government to change the regulations so all employees are auto-enrolled, employers need to look at their non-pension employees and encourage to opt-in.

Tell them about the free money from the government and the employer that they’re losing out on. And make it easy for them to join – forget about paper processes and make sure you have a simple digital solution.

2. Mind the career break

Women are twice as likely to have taken a career break which has negatively affected their pension savings. That this gap can be closed, but the longer it’s left the harder it is to close.

When women return to work, there should be a communication that identifies what they have lost during their absence and how they can make up this gap. It could just be about paying in an extra percentage of salary.

3. Give women what they need

People find pensions complex and the jargon-rich language that the industry tends to use, doesn’t help. But our research shows women find this more of a problem than men – nearly 53% more women than men say that they would save more into their pension if they understood it better.

People generally don’t engage with things that are see as complex and so it’s important to communicate in a user-friendly way that avoids jargon.

More women than men want to be able to access their pension through a mobile app – it’s more than one in three. It needs to be easy and that means making pensions more digital.

4. Someone to talk to

Now and again, there’ll be something that they would prefer to talk to a ‘real person’ about. More than one in two women want to be able to speak to someone directly at their pension provider.

Maybe it’s about making up contributions after a career break or transferring a pension pot from another provider. Employers need to make sure that their pension provider offers this communication channel.

5. Educate and educate some more

Cushon’s research shows that nearly one in four women workplace pension members aren’t sure how much the employer contributes for them, while 76% don’t even know where their pension money is invested. As a result, it’s difficult for them to know if they are paying in enough - and that is never going to close the pension gap.

As with most things, there is no single panacea for closing the gender pension gap, but there are concrete things that employers can do to help women help themselves to a better retirement.