Women want greater involvement from employers on pensions

A report by Phoenix Insights and the Institute for Employment Studies found that more than half (54 per cent) of the 4,000 UK women surveyed would think more about their long-term finances if their employer engaged with them on their pension.

The report, which included 50 interviews with women and businesses and a study of over 40,000 households, found that with the gender pension gap at 40 per cent in the UK, employers are in a “unique position” to narrow it.

The gender pension gap puts female workers at a huge financial disadvantage and could contribute to higher levels of poverty among older women — Abbie Winton, Institute for Employment Studies

A key takeaway from the report was the lack of awareness that exists around the impact a career break will have on pension contributions.

Despite women being more likely than men to take extended periods of leave, only 36 per cent consider the impact of reducing their hours on their pension pot.

The research revealed that on average, women contribute £102 per month less than men to their workplace pension, despite contributing a similar percentage of their salary (6 per cent).

By middle age (classified as 45-54 in this study), men are saving 50 per cent more into their workplace pension than women - £245 compared to £165 per month.

Women are also three times more likely to fall under the £10,000 automatic enrolment threshold than men (35 per cent versus 11 per cent).

Despite this, 47 per cent of women did not know they would not qualify for a workplace pension if earning less than this.

The research also found that only 17 per cent of women knew that if they opt-out of their workplace pension, it will be three years before their employer looks to re-enrol them.

Likewise, only 26 per cent knew that a family member or friend could top up their workplace pension while they are on parental or maternity leave.

According to Phoenix and the Institute for Employment Studies this highlights the need for better pension information in the workplace.

Phoenix Insights director, Catherine Foot said it is “vital” for employers to step up and support women throughout their lives “to make sure they are informed, provided nudges to engage, and offered flexibility at every opportunity”. 

“Many factors can affect women’s pension contributions, but from our research we know it can be exacerbated by life stages that can impact women’s earning power – such as taking time out to look after children, the menopause or long-term health conditions,” Foot explained.

The report suggested five key recommendations to help employers close the gender pensions gap.

These included:

1. Re-enrol workers annually, instead of every three years, to give workers the opportunity to re-engage if they have taken career breaks or have opted out because of a lack of affordability.
2. Ensure employer contributions to pensions continue for employees during periods of parental leave and actively highlight to all employees that partners, family or anyone else can make additional contributions to support. 
3. Adopt a minimum of five days unpaid leave for those with childcare responsibilities yearly, in addition to five days paid carer’s leave where possible.
4. Make flexible working the norm from day one and highlight this across all job roles. 
5. Implement a holistic health management policy programme that outlines support available for reproductive health conditions such as miscarriage, fertility treatment, for those diagnosed with endometriosis and managing menopause symptoms.

Institute for Employment Studies research fellow, Abbie Winton noted that in addition to the gender pay gap “the gender pension gap puts female workers at a huge financial disadvantage and could contribute to higher levels of poverty among older women.”

In Winton’s view, flexible working is integral to narrowing the gap.

She said: “One of the of the key ways of tackling this challenge is for employers to ensure that they are making full-time opportunities accessible to more women by making flexible working the norm and advertising roles as flexible from day one.”

jane.matthews@ft.com