10 May 2018
As part of new UK regulation, thousands of employers (employing over 250 employees) as of 4th April 2018 are now required to publish their gender pay gap figures for the first time and the information published so far, has shown that there is still a gender pay gap for women in companies.
This gender pay gap will impact on a woman’s ability to save for her retirement. It’s simple maths!! You earn less, but have the same expenses, so you have to prioritise your spending . It can be very difficult to think of the future when you have to pay for the here and now.
A recent survey by Scottish Widows* stated that the average pension saving pot for women was £64K compared to a mans of £125K. This is partly due to taking career breaks to have families, adjusting working hours to care for families and the cost of childcare which when combined, can affect women’s ability to save for the future. As life’s’ priorities change many women’s priorities change and pension savings take a backseat.
In addition to the imbalance, many women who work part time may not earn enough to qualify for pension automatic enrolment, meaning that they may not be saving at all for a pension.
Relying on your husband’s pension?
Some women are relying on their spouses pension in retirement. Statistics show that 42% of marriages end in divorce in the UK and 71% of divorced couples did not discuss pension as part of their settlement . 40% of women have worse retirement prospects after divorce. A general lack of pension knowledge could be one reason why women’s retirement savings worsen after divorcee. It is important that all women understand the steps that need to be taken to secure their own independent future.
What about the State Pension?
Combine this with the fact that a BBC report* uncovered that men still receive an average of £28 more a week in state pension despite reforms starting to narrow the pension gap.
Solutions?
Many employees, not just women, do not appreciate the importance of saving for their future retirement. Women typical are already disadvantaged in the work place, as shown in the Gender Pay Gap reports but this coupled with the lack of retirement planning education are a recipe for retirement disaster.
We have found that pension and general retirement education, in particular for women, is highly valued and appreciated. It helps them fully understand the importance of their pension and saving for their retirement in general. If they are aware of the gaps early enough and the cost of filling these they can look to do something about it rather than finding out too late.
Employers working with the right advisers can provide employee support via face-to-face meetings, group presentations, telephone helplines or online education. It can be very flexible, tailored to meet each employers environment and culture and doesn’t have to cost lots or take employees away from their work for long periods of time.
You’re paying into pensions for your employees but if they don’t understand the benefits of this to them personally, in realistic terms based on their own circumstances, do they appreciate and more importantly value this? In our experience some may a little, but nowhere near as much as when they do.
Helen is a Strategic Benefit Consultant specialising in strategies to maximise employee benefit value. Her contact details are: helen.pengelly@wingatebs.com 07825 990356 alternatively contact the Employee Benefit Team on 01883 332260.
Sources:
Scottish Widows Women and Retirement Report 2017 http://www.scottishwidows.co.uk/extranet/working/about/reports/womens-pension-report
BBC ‘State pension gender gap ‘narrowing too slowly’’ http://www.bbc.co.uk/news/business-43835706
