- The gender pension gap is more than double the gender pay gap. Figures from Prospect put the gap at 37.9% in 2019/20.
- Women face significant hurdles throughout their working lives that prevent them from building a good pension.
- The menopause is also increasingly recognised as a factor in women leaving the workforce early.
- Richard Holden MP recently brought a Private Members Bill to discuss changes to auto-enrolment which could result in people being able to contribute more to their pensions over a longer time. The minister said these changes would be brought forward in “the fullness of time.”
- Increased used of flexible working can help address the gender pension gap.
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown:
“Being a woman comes at a heavy financial cost. Not only are you paid less throughout your career you may also have to take time out of work to look after children, grandchildren and elderly relatives. Returning to work often means part-time work, reduced career opportunities and expensive childcare. Then when you finally get to a point where you might be able to start making a serious contribution to your long-term financial resilience menopause strikes and this can have an enormous impact on women’s ability to keep working.
These circumstances mean women are not only paid less they also enter retirement severely disadvantaged with much lower pensions than men. While auto-enrolment has brought more women into pensions there is much more that needs to be done.
Richard Holden MP’s recent Private Members Bill highlighted the importance of making changes to auto-enrolment which mean people can contribute more for longer and boost their pensions. These changes are in line with those highlighted in the 2017 Auto-enrolment Review which government said would be introduced in the “mid-2020s.”
However, when pressed on progress pensions minister Guy Opperman said they would be brought about in the “fullness of time” which means the mid-2020s pledge could be stretched to its maximum. It is vital time is taken to debate these changes and Hargreaves Lansdown recently co-signed a letter to the chancellor urging him to give time to consider the proposals. *
Changes to auto-enrolment will make a difference but can’t solve the gender pension gap by itself. The pandemic has shown home-working can work but more flexible arrangements like condensed hours and flexi-time could also be considered more. This would help everyone from the working mother to the person looking after their elderly parents.
Recent ONS data showed flexible working would be a key factor in enticing older workers who had previously left the workforce. Over one-third (36%) of workers aged between 50-70 who would consider returning to the workforce said flexible working would be a key aspect of choosing a new job. Let’s not forget the Dads who would welcome the opportunity to flex their time to spend more time with their families while their partners work. While employers may need some convincing it could be a powerful way of helping women build a more robust retirement income.”
*Hargreaves Lansdown recently co-signed a letter to the Chancellor asking for reforms to auto-enrolment to be considered. These are reducing the minimum age from 22 to 18 and removing the lower earnings limit. This means younger people could be enrolled and they would contribute to a pension from their first pound of earnings.