Almost one in two working age women have taken action to try and redress the pension savings gap according to research from Barnett Waddingham.
Their findings show 44 per cent of women with a workplace or private pension have taken steps to boost their retirement savings in light of hearing about the gender pensions gap.
A recent gender pensions gap report from Barnett Waddingham indicated that women typically have between 25 and 45 per cent less in their pension pots at retirement than men.
Most commonly, women have increased their monthly contributions, with 14 per cent of woman stating they have already done this. This is highest amongst younger women (aged 18 to 34) and is more likely to occur among women working full-time than part-time.
Other steps include discussing retirement savings with their partner (9 per cnet) and seeking independent financial advice (8 per cent). Women with a private pension or Sipp were more likely to have to have sought financial advice, at 13 per cent.
The research also determined what steps women are planning on taking, looking forward, with regards to their pension. Over half (55 per cent) of women plan on taking some action, with around 20 per cent saying they aimed to increase monthly contributions in order to build more more substantial retirement savings. Around 14 per cent of women say they plan to seek financial advice in future.
Around one in 10 (9 per cent of women) say they would like the government to change current policies to provide more support for women’s pensions.
However this suggests that around 45 per cent of women are not planning to take steps to address the pensions gender gap. Amanda Latham, policy and strategy lead at Barnett Waddingham says this could indicate they are already on track to a desired retirement lifestyle, or, and perhaps more likely, that there remains a lack of education and knowledge surrounding the disparity in retirement wealth and how to fix it.
She adds that it should not fall to individual alone to address this issue, it should be supported by wider policy changes.
Latham says: “The pension system is intrinsically biased towards men, creating a stark disparity in wealth at retirement that needs to be addressed at its core.
“It’s not enough to say that women need to contribute more to close the gap. Instead, we need to consider fiscal, behavioural, and societal issues collectively, and work to create a more robust and inclusive pensions framework that offers fairer solutions for all.”
Barnett Waddingham have suggested five policy changes that could help narrow the gender pensions gap.
- Review auto-enrolment rules: It is clear that the auto-enrolment minimum threshold impacts women more than men. The government should review this in the context of gender. Whilst there are proposals to remove the minimum earning requirement, this should be done sooner rather than later. In addition government should also remove the upper age band for pensions auto-enrolment., and consider income from income from multiple jobs.
- Review State Pension provision: This is to make sure it better reflects career breaks, and periods of being ineligible for auto-enrolment (if the minimum level of contributions remains). Provide more education on how to assess your state pension.
- Move to flat rate of pension tax relief: The current tax relief system benefits higher earners more than lower earners, which typically benefits men more than women. Moving to a flat rate will help women save more; e.g. moving to a tax relief flat rate of 30 per cent will typically increase a women’s total amount of pension savings by 35 per cent
- Collect data on people identifying as trans or non-binary: The evidence base on inequality of employment outcomes by sexual orientation is weak and inconsistent and that what is measured is what matters when we look to create change. To meaningfully develop a system that works for everyone, data needs to be collected and reported to understand progress and the impacts of policy changes.
- Allow couples to pay into each other’s pension plans: This will allow pension benefits to shared more equally and will allow both parties to take advantage of the incentives to save for retirement; i.e. tax savings. Consideration should also be made to allow couples to transfer assets between each other’s pension plans.