The government should pay the minimum auto-enrolment contribution to the private pensions of women who leave work to care for their children or elderly relatives, a think tank has said.
In its second report on how the 100-year life may affect Britain’s society, published today (October 28), the Social Market Foundation made five recommendations for action as it warned longer lives could amplify existing differences between male and female earnings and savings.
In Gender equality and the 100-year life, the think tank wrote: “As people retire later, the length of time in work will increase and wage disparities may continue to increase.
"This has the potential to deepen the divide between the financial position of men and women during and after their working lives."
To stop the gap widening, the government should consider paying into the pension pots of women who take time out of work to care for others, it stated.
In 2016, the Office for National Statistics estimated that a woman on maternity leave carries out weekly unpaid work with an economic value of £762.75, well above the average regular weekly wage.
Applying the current 3 per cent auto-enrolment minimum contribution to such a value would mean a new government contribution of £22.88 per week, or £1189.89 per year, to that woman’s pension pot.
The think tank also recommended it should be mandatory for companies to publish their pension policies when advertising job vacancies, with the goal to encourage workers to pay more attention to their long-term pension accumulation.
According to the SMF the Financial Conduct Authority also has a role to play in this area, as its data on individuals accessing their pension pot could be split by gender to highlight any differences in the decisions being made.
According to Kathryn Petrie, chief economist at the SMF, rising lifespans are a good thing, “but if we don’t have the right policies to respond, they could amplify financial differences between men and women”.
She added: “We should celebrate the 100-year-life but also accept that it has the potential to deepen the divide between the financial position of men and women during, and after, their working lives.
“To prevent the pension gap widening further, the government should consider contributing directly to the pension pots of individuals who take time out of the labour market to have children or to care for family members.
“For all the strides we’ve made towards equality, social attitudes that push women to give up work to care for children and parents remain strong.
“As well as trying to give women and men more flexibility and choices, government policies should do more to help women with the financial implications of taking time out of work.”
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