Think tank Phoenix Insights is calling on the government to make it a legal duty for employers to inform staff of the impact that any changes in their working hours -and resultant earnings - may have on their pension contributions.
Phoenix Insights' research, conducted by Opinium between 24 to 29 November, found that one third of women (32 per cent) reduce their hours for an extended period at points during their working lives.
The report is the second of two reports which analyse women’s long-term finances through the lens of the workplace and look at how the life events that women may encounter affect their working patterns, choices, and consequently their ability to save.
To help narrow the gender pension gap and based on the findings of the report, Phoenix Insights is making a number of calls to action from the government.
Catherine Foot, director of Phoenix Insights, said: “Women are being left behind in their pay and pension saving at key life stages and decisive action is needed to reform current policies and practices to support businesses and individuals in addressing saving inequality.
“Alongside employers, our research with IES highlights the need for the government to increase their efforts to close the gender pension gap.”
Foot said efforts should be focused on improving pension policy, providing better support for employers and introducing legislative protections for women at life events.
“We have identified key recommendations for these areas, including better pension accessibility and information, boosting financial literacy, and improving access to care and flexible working,” she said.
“Coordinated cross-departmental action to reform policy at the points which make the biggest impact to women’s working lives will lead to meaningful progress on the gender pension gap.”
Over half (55 per cent) of women would like to receive more information about their workplace pension from their employer, and more regular communication that goes beyond the mandatory minimum.
According to the research, this is seen as important to increase pension engagement.
The analysis found government action to improve pension policy, support employers and introduce legislative protections that help keep women in employment across different life stages, will help to increase saving capacity and close the gender pension gap.
Key recommendations for the government to close the gender pension gap:
Pension accessibility and information | Expand the legal requirement for employers on pension communications to include information such as how contractual changes (e.g. changes to hours/earnings) will impact pension contributions. Increase the scope of auto enrolment by lowering the age threshold to 18 and the earnings threshold to £0. |
Boost financial literacy | Increase the coverage and reach of impartial guidance by making free Pension Wise appointments accessible to anyone (currently over 50s only). Review the advice and guidance boundary to allow a larger population to have access to tailored and reliable financial support. |
Access to care | Revisit the Carer’s Leave Bill to ensure that working carers can access up to 10-days statutory paid leave. |
Right to flexible working | Flexible working should be available from the first day of employment, and the number of exceptional circumstances should be reduced from eight to two. |
Phoenix said the recommendations are set against the backdrop of the research which revealed one in five women (20 per cent) have opted out of a workplace pension scheme.
Of those that opted out, 36 per cent of women did not consider the impact that opting out of their pension would have at the time of their retirement or the loss of benefits at retirement.
Abbie Winton, research fellow at the IES, said: “If the current and future governments fail to act on the gender pension gap, we can be certain that increasing numbers of women will receive an income at retirement which will fail to allow them to meet their basic needs.
“Legislative changes, particularly around the removal of auto-enrolment thresholds, widening access to advice, improving the affordability and accessibility of child and social care, and rights to flexible working, are all critical to allow individuals to take control over both their working lives and their ability to save in a way that works for them.”
In response to this report, Phoenix Group said it made new commitments to:
- Proactively look to re-enrol employees not on the workplace pension scheme every year, instead of every three.
- Make pension impact information compulsory when reducing working hours.
- Monitor and analyse the monthly pension contributions of male and female colleagues across Phoenix Group.
- Work with its workplace pension clients to devise a standard analysis and reporting methodology for measuring the gender pension gap.
A Department for Work and Pensions spokesperson said: “Automatic enrolment has transformed pension saving and boosted the number of women saving for retirement, with participation rates catching up with those of men. In 2021, 87 per cent of eligible women working in the private sector were participating in a workplace pension, up from 40 per cent in 2012. Our ambition for the future of automatic enrolment will enable people to save more and to start saving earlier.
“We are also committed to ensuring people have the support and information they need to make informed choices about their financial futures, with free and impartial guidance available via Pension Wise and Money Helper.”
sonia.rach@ft.com
What do you think about the issues raised by this story? Email us on FTAletters@ft.com to let us know
