25 Sep 2019

The life-changing role employers have to play in narrowing the gender pensions gap

Although great strides have been made in the past century to bridge the gap between the sexes, we still live in a world where statistics show us that it is going to take almost three lifetimes (or more than 200 years – according to The World Economic Forum’s 2017 Gender Gap report) to achieve a more utopian kind of equality for both men and women. And there is one thing that is very clear in this shift – employers will play a leading role in helping to shape this new mould. Particularly from a financial and ideological point of view.

The retirement gap

The gender pay gap between men and women currently stands at around 18%. But lurking somewhat silently in the dark is the financial crisis that women are facing when heading into retirement. We now know that the female pension gap completely dwarfs the gender pay gap – and at almost 40%, is double the figure of the gender pay gap, according to research from trade union Prospect. In real world terms, this means that more women are facing poorer lives in retirement than men. But why? There are many reasons for this significant void in women’s savings that have contributed to them experiencing a much more financially raw end to life than men overall:

part-time working patterns (and therefore lower pension contributions)
salary differences driven by the gender pay gap
the rise in women’s state pension age to equalise with men
traditionally longer life spans
personal issues such as divorce and separation.

Although this may seem on the surface like a personal problem that falls outside of the working agenda, the bigger picture shows that this is a serious wellbeing issue – just perhaps one that is much longer term.

Mental health issues have taken centre stage for employers in recent years, and rightly so, but with huge gaps like this for women starting to take their toll on half of our population, financial wellbeing needs to find its foothold on our wellbeing and reward agendas if we are to ever truly take equality seriously.

How can employers bring about change for the sexes in a consistently fair but vital way?

One thing that is clear is that engagement is everything. At Personal Group, we ran workshops for our staff around the auto-enrolment pension contribution rise back in April. This exercise was intended to encourage all of our employees – not just women – to take up the opportunity to increase their pension pot and to educate them on the difference it would make to their lives. This kind of approach may not work for every organisation. What is key however is to build a strong rapport with your people and provide a thorough education about financial wellbeing. Engage with individuals. Change their lives. And you will reap the rewards.

There is something to be said about recognising the differences of your staff – as well as the similarities. People need to be given the right tools to handle their finances and be encouraged to consider different, perhaps riskier, investment strategies. Employers should review their benefits systems through a gender lens and always ensure that options and communications meet the needs of both sexes to have the biggest impact.

Outside of effective communications and engagement, there are also other options which, budget dependent, could really put your organisation in a trailblazing position among your peers. This could include offering an enhanced pension scheme for those on maternity leave, so they do not miss out on pension contributes while they are on leave and consequently receive a lower income at a later time in their life, when people often need the most support.

Being a game changer is a mentality for an organisation. To keep ahead of the curve and never lose sight of the future ahead of us, we must acknowledge but also look beyond the everyday if we are truly going to build a stronger, more resilient and meaningful workforce.

We must play our part and be the facilitators who can build an unbreakable bridge to help all of our employees (both men and women alike) both financially and otherwise in the longer term, not just for tomorrow. It’s time to start the future now.

This article is provided by Personal Group.