In the 21st century, significant strides have been made toward gender equality in various aspects of society, yet one area remains a persistent battleground: the inequality of women and their pensions. Despite advancements in women’s rights and workforce participation, disparities in pensions have far-reaching consequences, affecting not only the financial security of retired women but also perpetuating a cycle of inequality that resonates across generations.
It is important that women have the opportunity to reach their financial goals and live the retirement they imagine living. When women take on the role of carer for their children and/or parents, earning potential over their career lifespan becomes less. Research has shown that after having their first child, women’s earnings decrease whilst men’s remain the same and then continue to rise. This has a knock-on effect on private pensions as they depend on earnings.
The gender pension gap is an ongoing concern
The gender pension gap refers to the difference in retirement income between men and women. This disparity is not an accident but rather a result of a complex interplay of social, economic, and legal factors.
Some areas that contribute to this are:
The Pay Gap – One of the fundamental factors contributing to pension inequality is the gender pay gap. Women continue to earn less than men on average, which directly impacts their pension savings. Lower earnings translate into lower pension contributions, setting the stage for a financially insecure retirement.
Career Breaks and Part-Time Work – Women frequently experience interruptions in their careers due to childcare responsibilities or caring for family members. These career breaks and part-time work reduce their opportunities for advancement and pension contributions.
Longer Life Expectancy – Women tend to live longer than men, which means they need more substantial retirement savings to maintain their quality of life in old age. The current pension system does not account for this difference in life expectancy, further exacerbating the pension gender gap.
Lack of Pension Awareness – Many women lack adequate financial literacy and awareness about pension planning, leading to impractical pension decisions. The absence of information and guidance compounds the problem.
Discriminatory Practices – In some cases, women face discrimination in pension schemes. For example, some workplace pensions may not consider part-time work when calculating pension entitlements, resulting in lower benefits for women.
Menopause – The symptoms of menopause have sadly caused many women to either reduce their working hours or leave the workplace altogether. As a result, they could be missing out on important pension savings further down the line. Andy Briggs, the Government’s Business Champion for Older Workers, comments that “Nearly four million women in the UK are aged between 45 and 55 and are in employment. And women aged over 50 are the fastest-growing segment of the workforce. Yet one in five women end up leaving the workplace as a result of some of the symptoms of menopause.”
Addressing the gender pension gap
To combat the gender pension gap and promote equality, several key actions are imperative.
Narrowing the gender pay gap is a fundamental step in addressing pension inequality. This can be achieved by ensuring that equal pay for equal work is implemented across businesses and that employers prioritise salary transparency and fairness.
If policymakers recognise and value caregiving work, whether for children or elderly family members, this would have a positive impact on women being able to achieve a good pension.
It is important to improve women’s financial literacy by providing accessible resources and education on pension planning and investment which can empower women to make informed decisions about their financial future. Many women start their own businesses whilst they have small children, so getting pension advice early on in this process would be highly beneficial.
Employers can also play a significant role by adopting inclusive policies and practices that promote diversity and equity. This includes offering equitable benefits, ensuring promotion opportunities, and providing retirement planning support. Ensuring that women suffering from menopausal symptoms are listened to and offered support is important to keep them in the workplace. Employers need to consider solutions to help women to work comfortably during menopause.
The inequality of women and their pensions is a critical issue that requires immediate attention. Addressing the gender pension gap is not only a matter of social justice but also essential for the economic well-being and security of women in their retirement years. By narrowing the gender pension gap, we can build a more equitable society that recognises and rewards the contributions of women in the workforce and beyond, ensuring financial security for all in their retirement years.
It’s time to bridge the pension gender gap and pave the way for a more inclusive and prosperous future for all. Get in touch with Jane Newman Financial Planning Ltd to discuss your pension goals and opportunities.
A pension is a long term investment not normally accessible until age 55 (57 from April 2028 unless the plan has a protected pension age).
The value of your investment (and any income from them) can go down as well as up, which would have an impact on the level of pension benefits available.
Your pension income could also be affected by the interest rates at the time you take the benefits.
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