There has been a lot of mainstream press coverage of the Gender Pay Gap and we’ve come a long way on improving it – the Gender Pay Gap has fallen by approximately a quarter over the last decade1. However, an equally important issue has been left to lurk in the shadows - the Gender Pensions Gap.
It’s pleasing to see this getting increased coverage, but there are two questions we consistently hear on this topic:
- What is the Gender Pensions Gap?
- What can we do to fix it?
What is the Gender Pensions Gap?
Unlike its older sibling, there is currently no official measure of the Gender Pensions Gap. It is generally understood to refer to the differences in retirement outcomes for men and women. However, the DWP has recently published official statistics looking at the Gender Pensions Gap in private pensions – with the headline being that the Gap stands at 35%.
However we decide to define it, everyone should be able to achieve the same independence and security for their post-work life. Steps need to be taken to move the UK in the right direction.
The Pensions Minister, Laura Trott, is moving forward with setting a standardised definition of the Gender Pensions Gap, which she then intends to make reportable – a very positive step. However, we can’t keep our heads buried in the sand any longer - the Gender Pensions Gap has been an issue for decades, continues to be an issue now and needs to be addressed, to ensure men and women have equality at retirement.
Our own Helen Gilchrist and David Robbins have joined the Pensions Equity Group, an industry initiative to address this issue collectively, so we thought it was time to share some thoughts focused on the defined contribution pensions market where much of future pension wealth will come from.
Should we be concerned by the Gender Pensions Gap?
Yes, is the simple answer. The Gender Pensions Gap is a very real issue which needs tackling by all of those in the pensions industry – policymakers, pension schemes, employers, trustees, advisers, and individuals. As a trustee or employer, one of the main objectives in offering or governing a pension arrangement is to ensure members receive good outcomes. Surely closing the Gender Pensions Gap is going to lead to a big improvement in outcomes?
So how can we close the gap….?
Before we consider the tangible actions both employers and trustees can take, it’s important to consider what contributes to the Gender Pensions Gap – other than the direct impact of the Gender Pay Gap:
What can we do about the Gender Pensions Gap?
There is no silver bullet solution here. In order to close, and eventually eradicate the gender pensions gap, fundamental change is needed from all sides – from changing regulations and policy –to individuals understanding what changes they can make to improve their own personal situation.
Employers and trustees will play a part in this. Below is our checklist (available as a PDF download below) on how to take the first steps to address this in your organisation. There is plenty more to be done but this will help you to take the first steps.
| Key area | What to consider | How WTW can help |
|---|---|---|
| Educate | Awareness is an important first step to addressing the issue. | Training sessions with key stakeholders on the gender pensions gap. |
| Evaluate member outcomes | Organisations must understand the scale of the issue for them and, where possible, the drivers. | Member outcomes analysis and segmentation. Membership analysis to ascertain any difference in behaviours between genders. |
| Review broader HR policies and support | This issue cannot be solved by looking at pensions alone, consideration should be given to wide policies such as pay and parental leave. | Review of HR policies Broader benefit benchmarking. |
| Review your pension plan design | Consider how Plan Design can have an impact on the gender pensions gap. | Contribution benchmarking and modelling. |
| Communicate with members | Communication and engagement is key to ensuring you educate your members on the gender pensions gap and how they can personally improve their own financial positions. | Financial wellbeing sessions for women. Employee communication and engagement surveys. Implementing a communications strategy that considers diversity and inclusion through style and communication channels. |
Each of these areas is important and broad. Over the coming weeks, we will share some further thoughts focusing on how to monitor progress on the Gender Pensions Gap and, vitally, how to support individuals with planning for their future.
Footnote
Download
| Title | File Type | File Size |
|---|---|---|
| Gender Pensions Gap ChecklistPDF | .2MB |
Contacts
