With widespread closures of schools and businesses, we are in a period of uncertainty and worry for what the future holds on both a personal and professional level.
This pandemic is compounding already challenging issues.
The gender pay gap and gender pension gap are significant hurdles for women trying to save for their futures.
Our research from 2019 shows that women are reaching retirement age with £106,000 less in their pensions than men. The biggest cause of this gap is because women are taking time out of work to care for children and older generations.
Why are we wilfully blind to this?
The gender pay gap and the gender pension gap are issues hiding in plain sight.
Around the world, women are expected to be the primary care givers and whilst we continue to accept that these are the social norms, we cannot expect any radical change to current behaviours.
And it’s not just young mothers; new research from the University of Manchester, Mothers in Debt – Shame, Abuse and Resilience, revealed that separated or divorced mothers aged 55 and over were more likely to have worse financial problems than fathers of the same age in the same situation.
This means that employers need to be inclusive in their recruitment for older workers who need to continue working past the traditional retirement age.
Working 9 to 5 (6,7,8,9)
According to the latest ONS stats, there is an estimated 28 million of us in the UK who are now working from home in some respect (out of a total workforce of 33 million). This figure has increased hugely over the past few months as the global pandemic is forcing everyone who can to work from home (and raise our children).
While this can be disruptive, perhaps it also provides us with an opportunity to challenge some of these inequalities and put flexible working into action across the board.
This is particularly important for single parent households.
Flexible working is a key component to closing the gender pension gap.
By allowing mothers to return to work more quickly after having children, the smaller their pension gap will be.
Access to better and more affordable childcare is also paramount to enable mothers to return to work after having children, especially single parents.
How can we get more women to engage with their pension savings and start planning for a decent retirement income?
Engaging and planning is crucial as we simply cannot rely on the state pension which is £134.25 per week – come on girls let’s do this!
Opt in = Pay in
There are currently 3 million women in the UK who don’t meet the auto enrolment eligibility criteria and are effectively ‘locked out’ of workplace pension saving.
In order to pay into a workplace pension scheme, you must meet the auto enrolment criteria which includes being aged 22 and over and earn over £10,00, per annum, in a single role. 70% of part time workers are women which might mean they don’t meet this £10,000 threshold.
But don’t give up just yet – just because you don’t automatically qualify for your workplace pension doesn’t mean you can’t pay in. You can opt in!
So, how much is enough?
I’m always asked how much people need to save for a decent retirement.
The basic rule of thumb is that we should attempt to save 15% of our gross income into our pension.
The Pension and Lifetime Savings Association (PLSA) have created a set of Retirement Living Standards which highlight in pounds and pence how much we would need to save based on basic-moderate-luxury lifestyle expectations.
This is important as women today are living longer than ever before – on average we outlive our male counterparts by almost 4 years. Therefore, women need to pay in even more to account for the fact that they live longer (and have gaps in their work history).
It’s time for women’s pension power
Pensions were originally designed to last for a few years – not decades!
With the economic effects of the current coronavirus not yet known it seems likely that there will be significant job losses – in 3 weeks there have already been more than throughout the whole of the 2008 global financial crisis.
In order to try to prevent more job losses, there could more opportunities for employers to offer flexible working and a greater appreciation for the caring role that many women are expected to play.
The Government have now confirmed that workers who have caring responsibilities can be furloughed by their employer to enable them to care for dependants – which should help avoid redundancies in some cases whilst allowing parents to care for their children during school closures.
Taking time out of the workforce to care for the next generation should be recognised for the real value that it is providing; raising the next generation.
If we can enable mothers to return to work more quickly and more affordably, then we can help to close this huge gap – which is, quite frankly, unacceptable.
While empathy will play a key role in getting us through this uncertain time, longer term we need some serious policy changes to address the inequalities in pay and pensions.