The Gender Pensions Gap – what are practical ways to support your workforce?

In our previous article, we considered some of the factors which contribute to the Gender Pensions Gap and the steps employers and trustees can take when setting corporate policy and designing employee benefits. See our article and handy checklist: The Gender Pensions Gap – why is now the time to act? Getting the foundations right at Government and policy level will also be crucial.

In addition, it is imperative that we educate and inform individuals of the gender pensions gap and how they can personally improve their own financial situation using the benefits and options available to them.

What approaches have we seen?

Workshops for women’s networks can be used to change the mindset of how women and their partners think about their finances.

Why are these effective?

It provides the chance to directly address key challenges such as:

• Evidence suggests women tend to be more risk averse and lack confidence when choosing investments, which can lead to missed investment returns over the long-term. Explanations of the different types of risk relevant to short- and longer-term investing can help individuals to choose appropriate investment vehicles and asset classes to maximise growth potential. 
• Caring for children and others is not the only factor contributing to the pensions gap. However, career breaks and part time working due to taking on carer roles play a big part.  Encouraging women and their families to look at family budgeting in total is key here. Instead of “I can’t afford to pay (extra) pension contributions,” let’s encourage “what is our family budget for pension/longer term savings and let’s each make independent provision”.
• We often hear women say they can’t afford to return to work after having children or that their wages barely cover the cost of childcare, and it is common for women to pay childcare costs from their income. Tailored workshops can be used to challenge the status quo and to encourage couples to spread costs proportionately to income and/or working hours.
• A recent study found that a third of women don’t consider the impact of pension sharing on divorce. That is a significant shared benefit that is being lost as women don’t realise that they can claim on their partner’s pension.

Simple but effective tips can boost women’s pension savings significantly

For example, did you know that;

• If you are not working or your earnings are below the Lower Earnings Limit for National Insurance Credits (currently £123 a week), you need to claim child benefit to get National Insurance Credits for State pension (even if your household income means you won’t receive any immediate monetary benefit).
• You can pay up to £3,600 gross into a pension each year even when not working (or paying tax) and still benefit from 20% tax relief.

Targeted education can dramatically boost an employer’s financial wellbeing strategy. Please email Helen Perrin for more information on WTW’s group-based workshops and individual guidance and advice services, we can support with:

• Women’s workshops covering key pensions and savings issues.
• Individual guidance for those starting and/or returning to work from maternity and adoption leave to help them focus on immediate and longer-term priorities and help to highlight appropriate employee benefits to support their individual needs.
• Support for working parents to compare the costs and payment methods for childcare options.
• Budgeting and cost saving tips to increase the amount available for longer term savings.
• Low pay disproportionately affects certain ethnic groups. Targeted support to relevant networks including guidance on State benefits and money saving tips will be crucial.
• Divorce workshops and guidance sessions provide a foundation for individuals to understand the financial aspects of divorce including the value of pensions and how to invest lump sums.