How women are missing out on their biggest workplace benefit

Education is key to closing the gender pensions gap. Here’s what employers can do to help

A gender pay gap means there will always be a gender pensions gap. But it goes further than pay alone.

According to Scottish Widows’ Women and Retirement Report, 72% of single mothers are concerned about running out of money in retirement, compared with 61% of all women. Ethnic minorities are also more likely to be concerned – 68% of black women feel worried and 54% have a small amount of retirement savings or nothing at all.

But the gender pay gap is not always a bad sign for a business. It could accurately reflect the demographics of the workforce, where it enables women to have the choice of working part time hours to support their family requirements instead of being out of employment.

The gap is widened by cultural norms, which are slowly changing. These norms include women being more likely to take time out for caring duties, such as maternity leave, working part time while their children are young or caring for elderly parents.

Lowering the threshold

However, working part time can result in lower pay and may not even trigger the automatic enrolment requirement to join a workplace pension. Lowering the minimum age for automatic enrolment and scrapping the automatic enrolment minimum earnings threshold could bring 1.8 million women’s jobs into the pension system.

Historically, employers had age and seniority requirements for joining their pension scheme which automatically excluded women who didn’t stay with an employer for more than five years and/or reach management level.

The impact of divorce

Divorce can have a big impact on women’s retirement savings too. One partner often builds up more pension savings than the other and these pots can be the biggest asset after the family home. An extreme example could be a woman who has chosen to care for their children and not work. She’s relying on her partner's pension but divorce can leave her with no pension provision.

There’s no golden key to unlocking the problem – but here’s some things we can do:

1. Raise awareness with younger women – from nurturing daughters about future careers and talking about roles in a gender-neutral fashion to supporting and engaging younger female employees in saving money so they can get a head start in their 20s.

2. Speak to employees - explain how much they are paying into their pensions from their salary, how much their employer is paying in and how much the government is contributing through tax relief. For most people, saving into a workplace pension should mean they can expect somewhere between a minimum and moderate standard of living.

3. Talk about pensions - when deciding which parent should take on the caring responsibilities, consider important pensions issues such as long-term earning potential, workplace specific pension benefits and even the benefits of joint annuities. They can have a big impact on retirement plans. Talking about pensions with your family and friends helps everyone build an understanding.

4. Educate employees on what they can do to improve their retirements – look at your pension communication strategy. For example, Scottish Widows has lots of useful information on its Future Planning Hub and other big companies have a bounty of material that can help support employee education. Or work with a provider or pension communications team.

5. Explain how much women will need for a decent retirement - according to the Pensions and Lifetime Savings Association Retirement Living Standards, the minimum a single person needs in retirement is £12,800 a year, so the State Pension gets people almost there. However, £23,300 a year is needed for a moderate lifestyle and £37,300 a year for a comfortable one.

6. Track down past pensions - with house moves and busy family lives, it’s easy to lose track of pension pots. Employees can find a lost pension using the Government’s Pension Tracing Service.

Employers can support female employees in many ways to help ensure they have a plan for retirement but, first, understand the pensions gap and start educating women of all ages and ethnic backgrounds so they can focus on their finances for the future.