As International Women’s Day comes around once again, we reflect on how the world has changed over the last 12 months. Many of us are re-evaluating our relationship with money and realising the importance of having a safety net in place for these challenging times. One topic on the agenda is the gender pension gap which remains a bleak prospect for many women. So how can we empower our female employees to take control of their financial futures?

What the figures say

It has been 45 years since it became illegal to pay women less than their male colleagues yet figures from Scottish Widows reveal that women retiring today are likely to have total savings around £130k lower than their male counterparts. What’s more, research by Legal & General Pensions looked at the circa.37,000 people who retired in 2020 and found a massive 56% disparity in pension savings between women and men. That means a man’s pension pot at retirement is £21,000 compared to £10,000 for a woman – a difference of more than half.

A recipe for retirement poverty

It’s a depressing reality that a woman in her 30s who takes two years’ maternity leave and then returns to part-time work could miss out on up to £50,000 in retirement savings. Despite the inroads being made to narrow the differences between men and women’s salaries, the reasons for the pension gender gap are clear: women live longer, pay lower national insurance contributions due to career breaks, and are more likely to be part-time workers to fit around raising a family or caring for relatives – something which many women say they didn’t realise would impact on their financial well-being in retirement.

Empowering women to protect their futures

Women have more financial freedom and power than ever before and will hold 60% of the UK’s wealth by 2025 so there has never been a more opportune time for them to take control of their own financial futures. Organisations can help by providing the right advice and resources to empower women to be proactive in making the changes to improve their monetary outlook.

Get the conversations going

Broaching the topic of money in the workplace, in particular pensions, can be a difficult conversation. Organising an awareness and education session for female staff is a great way to kick-start the discussion. Other initiatives that would make a difference to women’s pensions include:

Enhancing maternity pensions, offering extended parental leave and providing better financial support for childcare. Not only would this alleviate the pressures on women who decide to have a family, it can positively impact employee wellbeing on a wider scale throughout your organisation.

Encouraging female employees to start their pension contributions earlier, adding a little more into their pot and if they have opted out previously, to get back them back onto the workplace scheme.

Do your female employees know that they can check their National Insurance record to see whether they are on track to get the full State Pension? You need 35 years of NI contributions or credits for that − if it looks like they won’t hit that then there is an option of paying to fill in the gaps.

Divorce can alter financial outcomes for both parties so reminding them to be aware of pensions when splitting assets might sound obvious but many women are more likely to face financial struggles following a divorce from their partner and waive their rights to a partner’s pension as part of their divorce settlement. Women over 50 are even more likely to do this as one in four divorces happen within this age group.

Women in the workplace shouldn’t be facing pension poverty at a time when they should be enjoying retirement. The true panacea will be when the gender pay gap is addressed but until then, empowering women to take active steps towards securing their financial future is one thing we can all do.

Charlotte Godley

Charlotte Godley

Head of Proposition

With more than 20 years experience in the UK employee benefits market, Charlotte joined Benefex in 2019 as Head of Proposition. Charlotte believes that the changing landscape of the workforce driven by both technology and social developments means now is the time for organisations to review how they can better connect with their employees to maximise engagement and productivity in an increasingly competitive market.

Phil Klimek

Phil Klimek

Corporate Pensions Director

Phil has over 35 years experience in the Pensions industry starting at Legal & General followed by Willis, Portus, Aon and Benefex who he joined in 2019. He has responsibility for the delivery of pension services such as Scheme Governance, Consultancy, Member Engagement/Education for a number of OneHub Benefex customers and has notable experience in the delivery of member presentations as well as ‘1 to 1’ guidance sessions. He is a member of The Personal Finance Society (DipPFS).