What’s driving the gender pensions gap?
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Policy change around auto-enrolment and workplace support for women going through the menopause are some of the solutions worth considering to tackle the pensions gap between men and women, a conference has been told.
There is often a perception the gender pensions gap appears in older age groups, however, figures analysed at a panel discussion at Legal & General Investment Manager Client Conference on Tuesday suggested the gap starts as early as age 29-30.
Citing LGIM’s proprietary data, Stuart Murphy, co-head of defined contribution at LGIM, said the gap becomes noticeable at age 35, to then increase.
He said: “Then by the time it gets to the point of retirement, [the pension value is] over half the amount of that of a male colleague who will also retire. So it’s a significant gap across the board.”
The savings gap appears in all sectors, even female-dominated ones, Murphy said. For instance, in the pharmaceuticals sector, the gap stands at 45%.
“This is sector agnostic, every single sector is impacted by the gender pensions gap,” he said.
What is the biggest cause for the gap?
An audience pool at the conference, attended by more than 200 delegates, found 64% believe the main reason for the gender pensions gap is the fact that some women work part-time or have stopped working due to caring responsibilities.
The gender pay gap was selected as the second most popular response, with 18% saying so, while another 17% believe it was due to more women in lower paid job roles. Only 1% believe more women are opting out of pensions.
Murphy stressed that all these factors have contributed to the gap but also revealed women are “unequally impacted” by the rules around auto-enrolment, as many of them earn below the minimum threshold £10,000 from a single job to trigger auto-enrolment.
“Women are more likely to have care and responsibilities. They may have multiple part-time jobs. What that means is they're not triggering the £10,000 entry point into auto-enrolment.”
He also noted many of the women surveyed by LGIM do not request to be enrolled into a pension because they are not aware of the benefit.
Design solutions for women
Amanda Latham, policy and strategy lead at Barnett Waddingham, said using the consultancy’s own data, the firm found that the gap starts to emerge at the age when women start to have children.
She agreed with the reasons discussed at the panel as the main causes for the gap, especially the policy design around auto-enrolment, “disadvantaging women because of that threshold”.
Latham said the government should consider solutions that break away from the restriction and enable access to pensions for women.
She also called for better investment solutions for women, for instance, with assets that could offer a stable income in retirement.
She said: “We should also encourage our colleagues across the industry to design investment strategies that work better for women.”
More support during menopause
Another reason for the pensions gap is the menopause, as the condition can affect women’s ability to work, therefore forcing them into early retirement, according to Greg Mills, head of communications and engagement at L&G.
Drawing on the experience of his family, Mills said many women with menopausal symptoms are treated as a joke at the workplace and ignored by their GPs when they seek medical help.
He called for workplace support for women and better understanding of the condition such as HR guidelines, more open talks with line managers about the topic, and employee benefits to include clinical support for the symptoms.
“Eight out of 10 women in the workplace will have some sort of symptoms, ranging across their life, to do with hormonal changes. We’ve got to have a support structure in place, because quite frankly if we don’t, don’t expect that pensions gap to close the way we want to,” he said.
In a second poll, which asked the audience to choose one single action that would improve the situation, 37% said employers should continue paying contributions during maternity leave or career breaks.
This was followed by improved education on long-term savings in schools and the workplace, as chosen by 29%. The third most popular intervention was the removal of the auto-enrolment eligibility criteria, as picked by 21% of the audience. Some 8% opted for support around menopause and female health, while the remaining 5% believe there should be compulsory pension sharing on divorce.
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