Recently, Which? and the Pensions Policy Institute joined the call for the growing problem of pensions gender inequality to be addressed.
Their new report rightly recognises how closely the gender pensions gap is tied to motherhood and taking time out of the workforce to raise a family.
Women are saving less into their pension pots than their male counterparts, due to reasons including reduced working hours, reduced responsibility roles and lower wages.
The report found that working women saved £15,000 more for their retirement if they took no time off, compared with mums who took a break to raise their children.
If we are going to tackle pensions inequality, better provision of affordable childcare is a must.It proposed a number of substantial suggestions to decrease the gender pensions gap, such as topping up pension pots by £2,000 to ensure new mothers aren’t penalised for having children.
While a good idea, there is a key root cause to this issue that must be addressed - the way mothers experience the labour market.
Our own research found that many women chose to reduce their hours, leave the workforce altogether, or return to work in a lower grade or lower paid role.
While many women chose to reduce their hours or stop working because they understandably want to spend more time with their kids, a key reason for some was that it did not make financial sense to keep working and pay for childcare, or they simply couldn’t afford to.
These changes in their working lives have a significant impact on their ability to save for a pension at the same level as men.
Women are likely to stop or significantly reduce their pension contributions, meaning they may miss out on employer contributions and lose the investment gains their contributions would earn.
But almost four in 10 women (38 per cent) who returned to work on reduced hours after having a child would have increased their hours if childcare was more affordable.
If we are going to tackle pensions inequality, better provision of affordable childcare is a must to enable those mums that want to keep working or work more hours, to be able to.
Pensions policy must do its bit too.
The Which? report calls for minimum pension contributions to rise from 8 per cent to 12 per cent for middle-income earners.
For many people, contributions of 8 per cent will not be enough but, following a squeeze on living standards since the financial crisis, there is a fine balance to be struck.
For some lower earners, contributions of 8 per cent in addition to their state pensions will be enough to live on in retirement. Raising pension contributions for all savers could leave some people unnecessarily worse off now.
Auto-enrolment is a hugely successful cross-party policy, helping more than 10m people save for their retirement, but there are still gaps in its coverage.
A number of auto-enrolment tweaks would work to decrease the pensions gender gap, as well as increasing the pensions coverage and ensure that the largely under-pensioned are included.
Abolishing the net-pay tax quirk would ensure 1.75m low earners - the majority of which are women - receive much-needed tax relief through auto-enrolment that they currently miss out on.
And cutting the required earnings to be eligible for an auto-enrolment pension to the primary National Insurance threshold to bring in half a million new pension savers - three-quarters of whom would be women
With the gender pensions gap currently more than double the size of the total gender pay gap, something must be done.
Gregg McClymont is a former shadow pensions minister and director of policy at The People’s Pension
