The Gender Pension Gap

It is widely acknowledged that embracing flexible working practices is a significant step towards improving social and financial outcomes for women, particularly those who find that balancing work and family roles is a barrier to workforce participation.

Access to flexible career opportunities are in also a powerful tool in the arsenal against the ticking time-bomb that is the gender pension gap.

The gender pensions gap

Last year, our amazing preferred pensions partner NOW:Pensions published pioneering research on pensions inequality for women.

Highlighting the gender pensions gap, their report revealed the sobering news that there are 50% more women than men heading towards retirement without any private pension savings at all.

The problem is that current policy and regulation around saving for retirement have not kept pace with changes in the workplace and society… nor account for the cataclysmic impact that the pandemic has had on women’s employment.

Pension saving is difficult, especially for women. Not only are they typically paid less than men, but are more likely to face life events which negatively affect how they save for their retirement- for example, having to work part-time or take time out of the workforce to care for children or elderly relatives.

What about auto-enrolment?

While auto-enrolment has served to get more people overall contributing towards a pension plan (according to the Department of Work and Pensions, 87% of private sector employees and 93% of public sector workers now participate in a pension scheme) auto enrolment has done little to address inequality so far. 1.2 million women with dependent children are currently looking after their family and are missing out on auto enrolment pension contributions. Less than two-thirds of employed women in any age group from their early 30s work full-time. Reduced hours result in reduced pay and many who are employed earn less than the £10,000 auto enrolment trigger. The fact that auto enrolment minimum contributions remove the first £6,136 of earnings from the auto enrolment calculation also hits the savings the financially weakest, who are more likely to be women than men.

Single mothers are particularly vulnerable

This is a problem which is compounded for single parents, particularly single mothers, for whom the pandemic has highlighted even more profound inequalities when it comes to saving for retirement.

Working alongside single parent Charity Gingerbread, the team at NOW:Pensions revealed that 49% of single parents reported taking on more debt during the pandemic and the average amount of debt held by single parents increased by around 15%. As 90 per cent of the UK’s 1.8 million single parent households are headed by women, the pandemic – and the corresponding increase in debt – has hit single mothers hardest.

New research conducted by NOW: Pensions and the Pensions Policy Institute (PPI) shows that since the pandemic around one quarter of single mothers have seen a reduction in earnings – their average annual income shrunk from £18,290 to £16,890. Those who were furloughed saw their pension contributions fall by an average of 25%. It also reveals that since the pandemic a further 9% of single mothers have been locked out of auto enrolment, meaning about 400,000 women are now missing out on vital pension contributions from their employer.

How can this be fixed?

To resolve some of this critical issues when it comes to pension equality, NOW: Pensions have presented a five-point policy proposal to government, which aims to help tackles some of these challenges and help bring 2.5m more people into pension savings.
This includes:

1. Removing the £10,000 trigger for auto enrolment in a workplace pension could bring another 400,000 single mothers into pension saving.

2. Ensuring pension contributions are taken from the first £1 of earnings would increase single mothers’ pension wealth by 52%.

3. The introduction of a family carer’s top-up would see the government pay the equivalent of the employer’s contribution at National Living Wage level into pensions for those women who are taking time out to care. This would equate to about £820 per year and would boost pension outcomes by 20% for women who take 10 years out due to caring responsibilities, then return to the workforce full-time.

4. Greater action on the availability and cost of childcare to support parents who want to return to work. Despite tax changes that help families with childcare costs, prices continue to rise. The Coram Family and Childcare Survey 2020 reports the cost of part-time nursery places for children under two have risen by 5%, (£138 per week, £7,000 per year), and for children aged two and over, it now costs 4% more.

The above editorial is a summary of a collection of reports and articles created by the team at Now: Pensions including The NOW:Pensions Gender Pension Gap report  and How has the pandemic affected single mothers’ pensions

NOW: Pensions is a leading UK workplace pension provider who look after the pension savings of tens of thousands of employers and millions of members from a wide range of industry sectors.

They have a clear mission – to fight for a fair pension system that benefits everyone. Not only does this mean achieving the best financial outcomes for their members, but also playing their part in ensuring that all pension savers get the retirement they deserve. They do this by highlighting pension inequalities and campaigning for change.

NOW: Pensions are the UK’s third largest auto enrolment pension provider by number of members.

Leave a Reply

Your email address will not be published. Required fields are marked *

The Gender Pension Gap

It is widely acknowledged that embracing flexible working practices is a significant step towards improving social and financial outcomes for women, particularly those who find that balancing their work and family roles is a barrier to workforce participation. Access to flexible career opportunities are in also a powerful tool in the arsenal against the ticking time-bomb that is the gender pension gap.

The gender pensions gap

Last year, our amazing preferred pensions partner NOW:Pensions published pioneering research on pensions inequality for women.

Highlighting the gender pensions gap, their report revealed the sobering news that there are 50% more women than men heading towards retirement without any private pension savings at all.

The problem is that current policy and regulation around saving for retirement have not kept pace with changes in the workplace and society… nor account for the cataclysmic impact that the pandemic has had on women’s employment.

Pension saving is difficult, especially for women. Not only are they typically paid less than men, but are more likely to face life events which negatively affect how they save for their retirement- for example, having to work part-time or take time out of the workforce to care for children or elderly relatives.

What about auto-enrolment?

While auto-enrolment has served to get more people overall contributing towards a pension plan (according to the Department of Work and Pensions, 87% of private sector employees and 93% of public sector workers now participate in a pension scheme) auto enrolment has done little to address inequality so far. 1.2 million women with dependent children are currently looking after their family and are missing out on auto enrolment pension contributions. Less than two-thirds of employed women in any age group from their early 30s work full-time. Reduced hours result in reduced pay and many who are employed earn less than the £10,000 auto enrolment trigger. The fact that auto enrolment minimum contributions remove the first £6,136 of earnings from the auto enrolment calculation also hits the savings the financially weakest, who are more likely to be women than men.

Single mothers are  particularly vulnerable

This is a problem which is compounded for single parents, particularly single mothers, for whom the pandemic has highlighted even more profound inequalities when it comes to saving for retirement.

Working alongside single parent Charity Gingerbread, the team at NOW:Pensions revealed that 49% of single parents reported taking on more debt during the pandemic and the average amount of debt held by single parents increased by around 15%.
As 90 per cent of the UK’s 1.8 million single parent households are headed by women, the pandemic – and the corresponding increase in debt – has hit single mothers hardest.

New research conducted by NOW: Pensions and the Pensions Policy Institute (PPI) shows that since the pandemic around one quarter of single mothers have seen a reduction in earnings – their average annual income shrunk from £18,290 to £16,890. Those who were furloughed saw their pension contributions fall by an average of 25%.
It also reveals that since the pandemic a further 9% of single mothers have been locked out of auto enrolment, meaning about 400,000 women are now missing out on vital pension contributions from their employer.

How can this be fixed?

To resolve some of this critical issues when it comes to pension equality, NOW: Pensions have presented a five-point policy proposal to government, which aims to help tackles some of these challenges and help bring 2.5m more people into pension savings.
This includes:

1. Removing the £10,000 trigger for auto enrolment in a workplace pension could bring another 400,000 single mothers into pension saving.

2. Ensuring pension contributions are taken from the first £1 of earnings would increase single mothers’ pension wealth by 52%.

3. The introduction of a family carer’s top-up would see the government pay the equivalent of the employer’s contribution at National Living Wage level into pensions for those women who are taking time out to care. This would equate to about £820 per year and would boost pension outcomes by 20% for women who take 10 years out due to caring responsibilities, then return to the workforce full-time.

4. Greater action on the availability and cost of childcare to support parents who want to return to work. Despite tax changes that help families with childcare costs, prices continue to rise. The Coram Family and Childcare Survey 2020 reports the cost of part-time nursery places for children under two have risen by 5%, (£138 per week, £7,000 per year), and for children aged two and over, it now costs 4% more.

The above editorial is a summary of a collection of reports and articles created by the team at Now: Pensions including The NOW:Pensions Gender Pension Gap report  and How has the pandemic affected single mothers’ pensions

NOW: Pensions is a leading UK workplace pension provider who look after the pension savings of tens of thousands of employers and millions of members from a wide range of industry sectors.

They have a clear mission – to fight for a fair pension system that benefits everyone. Not only does this mean achieving the best financial outcomes for their members, but also playing their part in ensuring that all pension savers get the retirement they deserve. They do this by highlighting pension inequalities and campaigning for change.

NOW: Pensions are the UK’s third largest auto enrolment pension provider by number of members.

Related Posts