Pension Parity: Only a Holistic Approach Will Deliver Equality at Retirement
Tuesday 26 July 2022
Lorraine Acheson, Managing Director of Women in Business
What does it say about the chasm currently separating male and female professionals when Legal & General estimates that, based on UK data, a woman’s average pension pot at retirement is less than half that of her male colleague’s.
Come retirement age, women on average have £69,000 in their pension, whereas the ballpark retirement savings for a UK male currently stands at £205,800, according to 2021’s figures. The numbers are eye-watering, yet sadly not all that surprising.
Not when women in the UK earn 87p on average for every £1 earned by men. Gone unchecked, which can so often be the case, the pension gap is only compounded through time, reaching as high as 16% at the beginning of a woman’s career and eventually ballooning past 55% by their early fifties.
Right now, the pension disparity between men and women is self-perpetuating. The seemingly inevitable conclusion to a working world tilted off-balance. After all, it was only six months ago that the Institute for Fiscal Studies delivered the damning statistic that, in the last 25 years, almost no progress has been made on closing Britain’s gender pay gap when accounting for women’s leaps in education.
An imbalance in pay is, of course, the root cause. But one gender gap begets another. What we need is a holistic approach to reduce disparities in our pensions and in our pay. Initiatives such as a family leave policy to account for either caring or childcare responsibilities, the majority of which still fall upon the shoulders of women, can go some way to redressing the imbalance we now face.
A more considered employer scheme around menopause, too, given 900,000 women in the UK are currently retiring each year at the exact time in their careers when their earning potential is likely to be at its highest.
For pensions, in particular, more education is needed. In many ways the onus is on the government and employers to address the knowledge gap so they may better support women for age 66 and up and, in so doing, create a better understanding of how reduced hours, career breaks, and potential changes in family circumstance can have a lasting impact on a personal pension.
Cross-industry collaboration can help bring the gap to a close, too, and the current measure which requires UK companies with more than 250 staff to report their gender pay gap is a welcome move towards accountability. The first step in addressing a problem is acknowledging its existence. And disclosure from companies can help better identify and fix this long-standing issue.
Only a holistic approach can deliver pension parity. So we may leave the working world on an equal footing.
Tuesday 26 July 2022