Only one-third or 34 per cent of working women consider the impact of reducing their hours on workplace pension contributions, compared to nearly two-thirds of men, according to Phoenix Insights.
The report, “Caught in A Gap: The Role of Employers in Enabling Women to Build Better Pensions,” is released as a result of new research from the think tank that indicates that 54 per cent of women would like their employer to engage with them more about their workplace pension and 75 per cent believe it should be required by law for employers to inform employees about how monthly pension contributions change when working fewer hours.
Three-fifths of women, or 62 per cent, say they are concerned that they will not be able to save enough for retirement owing to the present economic climate as the cost-of-living crisis continues to affect many.
The call for employers to actively involve women in their pensions at work comes as only 34 per cent of women who have cut their weekly working hours have thought about how that will affect their monthly workplace pension contributions, and only 36 per cent have thought about how that will affect their overall pension pot. This is despite over three quarters or 77 per cent considering how reducing their hours will affect their monthly payslip.
The new report from Phoenix Insights and IES analyses data from 40,000 households along with more than fifty interviews with women and employers and reveals that, on average, women contribute £102 less per month to their workplace pension than men do while contributing a similar percentage of 6 per cent of their salary. Men are saving 50 per cent more into their working pension than women by the middle age (45–54) bracket (£245 versus £165 per month).
According to the think tank, the need for better information in the workplace is further evidenced by the fact that women are three times more likely than men to earn less than the £10,000 automatic enrolment threshold (35 per cent vs. 11 per cent). But in a recent poll, less than half or 47 per cent of respondents knew they would not be eligible for a workplace pension if they earned less than £10,000.
Phoenix Insights director Catherine Foot says: “Many factors can affect women’s pension contributions, but from our research we know it can be exacerbated by life stages that can impact women’s earning power – such as taking time out to look after children, the menopause or long-term health conditions. It is vital for employers to step up and support women throughout their lives to make sure they are informed, provide nudges to engage, and offer flexibility at every opportunity.
“We have partnered with IES to create five key recommendations that we hope employers can take away to enact real change – from proactively looking to re-enrol people who have opted out of their pension every year instead of three, flexible working from an employee’s first day, and putting women’s health at the heart of the workplace through inclusive health policies. We were set up as a think tank with a mission to transform the way society responds to the possibilities of longer lives – helping to close the gender pension gap and enabling women to succeed in creating better financial futures to and through retirement is a key part of that.”
Institute for Employment Studies research fellow Abbie Winton says: “Similar to the gender pay gap, the gender pension gap puts female workers at a huge financial disadvantage and could contribute to higher levels of poverty among older women. Our research indicated that women are less likely to be automatically enrolled since they are disproportionately represented among those beneath the £10,000 threshold.
“For women who do contribute, the value of their contributions remains restricted by the lower levels of pay they receive on average, despite contributing a similar proportion of their earnings to men. While we welcome initiatives that will help to address the gap, such as flexible working from day one, one of the key ways of tackling this challenge is for employers to ensure that they are making full-time opportunities accessible to more women by making flexible working the norm and advertising roles as flexible from day one.”