Baby boomers – my parents’ generation – have without exception been shocked when I tell them I’m about to embark on six months of paternity leave.
From now until May(!) I’ll be at home looking after baby number two, all while being paid my normal salary. Cue lots of head shaking and expressions of amazement at the kindness of my employer.
What’s interesting of course is that the same generation is often in receipt of defined benefit pensions.
The generosity of these pensions is such that many British companies have been driven to the brink of crisis over the years. At the least, they have been severely hampered by having to divert billions of pounds that might have been spent on expansion and reinvestment into staff pension funds. The British Airways owner IAG, BT, Royal Mail and countless others have all been held back by the promises made to staff who may have left decades ago.
The point is that what we consider to be a good, bad or brilliant benefit of working at a particular company is changing as pensions shrink and priorities change.
You don’t need to be a maths whizz to realise it is far, far cheaper for The Telegraph to pay me for six months of not working than to keep its promise to pay half the final salary of a former employee for 30 years of retirement.
The retired now in receipt of those top-quality pensions are right to point out that they haven’t had it all good. As recently as the 1970s, there was no maternity leave at all. Fathers certainly didn’t have any time off, and most dads were back at the coalface, in some cases literally, the next morning. Even now, most men barely take a fortnight.
For people in their 20s and 30s with plans for children, extended paternity leave like mine is a real incentive and is offered by very few companies – the insurance giant Aviva is a notable exception. Pensions, on the other hand, are a difficult sell to all but the most informed, or those nearing retirement who want to stuff their pots while they can and make use of the tax reliefs available.
The Great Resignation, a Covid-era phenomenon that has seen record numbers of people quit their jobs, makes boring old workplace benefits more pertinent than ever. It is a myth that most people worked from home during the pandemic. Even in London, which had the highest proportion of home workers, the figure was only 48 per cent. Yet top of the list for most professionals now is flexible working, as desk-based staff fight to make permanent the working-from-home revolution forced by lockdown.
But perks for parents are increasingly popular. Nearly two thirds of working parents would switch jobs for better parental leave, according to new research from Virgin Money, who it must be said have some skin in the game with its equal paternal leave package.
The pandemic highlighted just how lopsided childcare responsibilities are in most families. Giving chunky leave to the likes of me doesn’t just mean dads get a chance to bond in a way that was impossible in the recent past – it helps mothers back into the workforce, too. Each year a woman spends out of the workforce cuts her pension wealth by £1,800, according to Now: Pensions, the auto-enrolment provider. Aside from pensions, we know that extended time out of work, and switching to part-time hours as returning mothers often do, is one of the reasons for Britain’s yawning gender pay gap. Children usually come along at precisely the same time that you could be taking on more senior roles with plumper salaries.
Do I yearn for the return of final salary pensions? The fact is that they aren’t coming back. And if it ever happens the “collective defined contribution” idea being trialled by Royal Mail will be limited to the public sector as a way to water down existing schemes.
Maybe I won’t be saying this when I’m 60, but it makes far more sense for employers to offer perks valued by their staff now.
As job hopping becomes increasingly common, long-term benefits like pensions will give way to incentives designed to keep hold of people for an extra year or two. Unless a future government forces employers to raise auto-enrolment contributions I can’t see that changing.
But that’s a problem for another column. For now, I’m going to sail off to the land of nappies. See you in the spring.