Despite significant progress being made over the past few decades, a gender pay gap still exists in most countries, meaning women generally earn less on average than men. Somewhat less well known though is a lingering consequence of the gender pay gap which impacts women long into the future. This is the Gender Pension Gap which means that women, upon reaching retirement, often have substantially less saved in their pensions when compared to men.
Despite being less well publicised, and less talked about than the Gender Pay Gap, the scale of the Gender Pensions Gap is considerable. Recent research suggests that at the age of 65, the average UK woman will have only 33.5% of the pension savings of a man of the same age. Incredibly, to accumulate an equivalent pension, a women would need to work an additional 18 years in full-time employment – a stark illustration of scale of the Gender Pension Gap issue.
The Gender Pension Gap largely stems from the pension contributions made during a women’s working life. Since the amount of pension contributions are closely tied to earnings, women, who earning less on average, tend to have lower contributions. As a result, their pensions do not benefit as much from the compound growth and interest that is crucial for a pension pot to adequately fund later life.
However, the Gender Pension Gap is further compounded by additional factors beyond differences in salary. Women are more likely to work multiple part-time jobs, and often fall short of the minimum income threshold required to be automatically enrolled in a company pension scheme. Consequently, women are less likely to have workplace pensions than men.
Career breaks taken by women to care for children, elderly relatives, or manage the effects of menopause also disproportionately affects their pensions. These breaks disrupt both earnings and pension contributions, and the longer the gap persists, the more challenging it becomes to mitigate their impact on pension savings..
And then there is the issue of financial confidence. Research suggests that women are likely to be more financially cautious than men and less likely to make investments. The complexity of the language and jargon associated with pensions presents a significant barrier for women and is a major reason why women tend to be less active in managing their pensions.
So, what can employers do to help address the Gender Pension Gap? First and foremost, providing financial education in the workplace is crucial to raise awareness of the issue and equip women with the knowledge and tools needed to overcome its impact. They is why Better with Money has developed a webinar called Money and Women.
Designed to specifically address money matters relevant to women, Better with Money aims to provide women with the tools, knowledge and resources to take control of their financial future. Our Money and Women webinar aims to increase understanding and confidence needed to navigate pension jargon, investment options, and the long-term benefits of saving for retirement. It is our aim to help women make informed decisions to actively shape and secure their financial future and, ultimately, help create a more equitable future for all.
If you would like to find out more about Better with Money’s webinars and courses, please get in touch.