To mark International Women’s Day on 8 March, a campaign that calls for a more gender-balanced world – Punter Southall Aspire is calling on employers to consider if they have a gender pension gap and take action, as many women may still be disadvantaged when it comes to pensions.
According to research by trade union Prospect, women retiring in 2016/17 had 40% less money in their pension pot than men. Thanks to auto enrolment, the same proportion of men and women now contribute to a pension, however, women in their 20s are still saving less than their male peers.
Fidelity International’s Financial Power of Women report in July 2018 highlighted that the average pension pot for a man aged between 25 and 34-years old saving in line with the government’s auto-enrolment contributions would be worth £142,836 at the State Pension age of 68. This figure drops to £126,784 for a woman in the same age bracket.
Johanna Nelson, associate director of communications, Punter Southall Aspire said, “There is a significant pensions gap between men and women, but employers can address this issue. Last year, Punter Southall Aspire conducted research into pensions saving and communications which found that men and women approach spending and savings very differently. Using this insight, employers could adapt their communication strategies and help women improve their pensions engagement and savings.”
Johanna highlights five key findings from the report, ‘It’s Time to Change,’ and actions employers can take to address the gender pensions gap.
- Help women gain more control over their spending habits and confidently save
Given the choice of one luxury holiday now, or two in retirement, women are 10% more likely than men to opt for the holiday now. 53% of women said they bought more than they needed, compared to 43% of men. And 72% of women worried about how much they were spending compared to 61% of men.
One solution is for employers to provide financial education such as workshops on money management. All employees should be invited, but if there is a women’s network in the organisation, they could encourage female employees to attend.
- Give women clarity about their own pension and impact on their future
The research found that 87% of men know exactly how much money they are saving into their workplace pension compared with 77% of women. And, while a fifth of men said they had “no idea” whether they were saving enough, almost a third of women admitted they were in the dark about their pension savings.
Employers could ensure that employees are regularly updated on the status of their pensions savings, ensure they understand their contributions and how their pension pots are likely to accrue over time. Adding an executive summary to annual statements (where possible) or offering a one to one support service, where employees can speak to a financial adviser, would be a helpful communications solution.
- Words or numbers?
When it comes to pensions communications, women are more interested in words (43%) and scenarios (26%). Only 20% wanted numbers. Men were slightly less interested in words (38%), but far more interested in numbers (32%).
When developing a communication campaign around financial wellbeing or pensions, employers need to consider messages that will resonate with different audiences. Employers could produce one basic piece of collateral and refer people who want more in-depth numbers to an additional resource, such as a supplementary web page or seminar.
- Empower women to take ownership of their own finances
The research indicated that women feel they have less ownership of their pension than men do. Compared with men, they see a greater role for the employer in providing information and guidance to help their pension decision making and are more inclined to accept the standard contribution basis set by the employer, without making any adjustments.
Employers could support their employees by providing resources and information that can help them set financial planning goals. They could consider using women’s networks within their organisation to run programmes to empower women financially.
- Help women save for specific objectives
Almost a quarter of women were saving for a specific objective, like a holiday or a house, compared to just 17% of men. To encourage female employees to put more money into their pension pot, employers could think about ways to embed good saving habits more broadly. Given women’s more goal-orientated approach to saving, a comms campaign could encourage staff to nominate specific causes they want to save for (both now and in retirement).
Nelson added, “These are five practical ways employers can help female staff save more, build their pension pots, and achieve greater financial wellbeing. The gender pension gap won’t be resolved overnight and it’s important to encourage all staff to engage with their pension savings on an equal basis, but tailoring communications to overcome specific barriers to saving is a step in the right direction.”