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One new employee shares ways to make things better.
When it comes to workplace benefits, pensions are undeniably one of the most important. Over the years, they can add up to many tens of thousands of pounds, with employers usually contributing a sizeable portion.
Yet women’s pensions still lag men’s. As our latest Women and Retirement report shows, 42% of women risk facing poverty in retirement, compared to just 35% of men.
It’s something we covered in our brilliant mother and daughter special podcast for International Women’s Day earlier in March. My colleague, MD of Scottish Widows, Jackie Leiper and her daughter Rebecca joined me to discuss ways they’d found to make talking about finances an everyday habit – and how to make things better.
Jackie and Rebecca, who recently started her first job after university, shared their experience of managing their finances and the importance of helping the next generation understand the basics of budgeting and setting good habits from the very first pay cheque.
For Rebecca, the importance of automatic enrolment, and having open and honest conversations about money has given her the grounding to set herself up for a better financial future. She’s checking in on her pension, and how much she’s got in her pot after just a few months is enough to spur her on to save more.
Pension progress
The good news is that the gender pension gap – fuelled by women taking time out from employment to have a family and societal issues such as unequal parenting responsibilities and historically lower pay – is narrowing.
When we look at data from our workplace pension members, the gender pension gap reduced 7% last year. This amounts to an average reduction of the gap between men and women’s pension pots of £1,789.
The biggest, positive change for women has been automatic enrolment (AE) into workplace pensions which began 12 years ago, bringing them broadly into line with men’s participation rates.
However, providers, employers, and policy makers need to keep working together to support women and finally close the gender pension gap.
Working with employers: Targeted support during life stages when women need it the most, such as during maternity leave, part-time work, or when taking on caregiving responsibilities can make a real difference. Women need to understand the impact their work decisions could have on their later life, too.
Policy action: We attended a roundtable on women’s financial resilience at the House of Lords in February where we shared the findings from our Women and Retirement report and discussed the structural inequalities that women face in their preparation for retirement, as well as their wider financial resilience. It was a brilliant opportunity to lay bare the financial realities for a lot of women.
We regularly campaign for change and support the government’s aims for extending auto-enrolment so that younger workers are automatically enrolled from the age of 18. We want to see the lower earnings threshold abolished, too, so that pension payments start from the very first pound of earnings.
Together, these will make an enormous difference, especially as most part-time workers are women who are often excluded from pension saving as they don’t earn enough. While these AE reforms appear to have been put on hold, we’re pushing for them to be brought in soon.
Four steps women can take to build their pension saving
- Starting to talk about money with friends and family, let’s raise awareness.
- Find out all you can about your pension and what’s on offer. Make a date with yourself to check in and see how your pension is building. Using a pension app is a great way to manage your savings, understand how much might be needed, and keep on track.
- Make the most of employer contributions into workplace pensions, your employer may pay more into your plan with you.
- As Rebecca’s story above shows, saving from the first pay cheque is a good way to get in the pension saving habit but remember it’s never too late!
We all want better retirement outcomes for the next generation than our mothers had – and quickly. That will certainly be something worth celebrating.
- Explore what actions can be taken to support women’s finances:
Listen to our IWD podcast, hosted by Jill Henderson (pictured, centre), with Scottish Widows’ MD Jackie Leiper and her daughter Rebecca Leiper.
Read Scottish Widows’ Women and Retirement report.
