Prioritising pensions will help women close the gap on their male colleagues25 June 2015 Back to results
Last week Nobel laureate Sir Tim Hunt lit a fire under the gender equality debate and the flames of discussion are still burning across the national media’s front pages.
In the pension market there’s also a passionate discussion on gender equality taking place and particularly around the need for women to get the best out of their workplace pensions. But unfortunately I think a lot of female workers don’t prioritise their pension, making it difficult to then generate the income they’ll need in retirement.
Our latest Readiness Report (PDF - 595kb)(Opens new window) found that half as many women as men were financially on track for the retirement they’d like and that only 29% of women felt confident about being able to retire when they wanted to.
But for me two of the most unsettling findings were that almost two-thirds (64%) of employed women don’t know how much their employer is contributing to their workplace pension and that 61% have never checked the performance of their retirement savings. In short they’re not taking an interest.
This lack of knowledge about the funds flowing into their pension creates a series of problems. The first is that without knowing what’s going in, it’s impossible to understand what might come out of the pension at a later date. Operating blind also makes it difficult to set targets that are realistic or to implement the right savings and investment strategies to achieve them.
But why have so many women put their pension on the back burner? Younger workers tend to be less interested in pensions and motherhood comes at a time when many women would be starting to think about them.
Where women decide to return to work after maternity leave, a lot opt to come back on a part time basis as they juggle their professional and family commitments. The reduced salaries and added pressures that this brings push pension planning further into the background.
Another hurdle facing employed women saving for later life is the pay gap between men and women that still hasn’t been bridged. Salary equality is slowly being tackled, but to get the best of what women have today it’s essential they engage with their workplace pension as early and as fully as they can.
Employers should also be driving this agenda so they can show staff how much they’re investing in them and the difference it makes to their long term savings.
Some companies have started issuing annual benefit statements that outline pension contributions and other benefits provided over the year and by detailing them in this way it becomes easier for employees to genuinely value them. If more employers took this approach it would raise awareness and drive better engagement with what’s on offer.
There are already rules in place about scheme governance and member communications, but sometimes it’s difficult to keep part time and remote staff at the centre of a firm’s communication strategy. Putting an emphasis on communications to these staff is another measure that firms could employ to improve pension awareness and engagement.
Then they could provide digital tools to enable staff to engage easily with their workplace pension and actively manage their savings for retirement. The need for these tools was one of the major drivers in behind the launch of Retiready in the Workplace(Opens new window) our online digital planning service for employees.
For women the challenge is to find time to understand exactly what’s going into their pension and to then make it work as hard as possible for them. The more women engage with their pension, the more likely they’ll be to hit their goals for retirement.
But these improvements will only come if employers are pushing from one side just as hard as their female employees are pushing from the other and the effort they put in will bring benefits for both sides.