Today, the CII Insuring Women’s Futures launched their manifesto, aiming to improve the financial journey of women throughout their lives. NOW: Pensions is proud to be a key supporter and ambassador of this group and is passionate about improving pension equality in the UK.
NOW: Pensions has signed up to the CII’s Insuring Women’s Future initiative
The pension provider is proud to support the CII Insuring Women’s Futures manifesto and sign up to the pledges to improve gender equality in the industry.
- Flexible working
The “flexible working” pledge commits firms to helping their colleagues understand and manage the long-term financial implications of flexible working.
- Inclusive customer financial lives
The “inclusive customer financial lives” pledge commits firms to adopting an inclusive “whole customer” approach, considering the impact of their life circumstances.
Closing the gender pensions gap
NOW: Pensions released a report in July 2019, Facing an unequal future – closing the gender pensions gap, which revealed that there are 50% more women than men heading towards retirement without any private pension savings at all. The research also found that, of those who do have private pensions, the average woman has just a third of the pension wealth of the average man – £51,100 and £156,500 respectively.
Working part-time to balance caring responsibilities has the biggest impact on women’s ability to save for their future, resulting in a 47% reduction in women’s pension wealth compared to men by their late 50s. This has a bigger impact than the gender pay gap, which cuts women’s pension savings by 28%.
A part-time salary might mean they don’t meet the £10,000** a year threshold in a single job to be auto enrolled into a pension scheme – causing them to miss out on saving for their retirement and receiving employer contributions.
We call this the “part-time pensions penalty”.
NOW: Pensions five-point plan for fairer pensions
Within the IWF manifesto are a number of policy recommendations to help make pensions fairer for both women and men. NOW: Pensions put forward five policy recommendations in July 2019 as part of the Facing an unequal future – closing the gender pensions gap report. These include:
- Removal of the £10,000** auto-enrolment trigger to get more women into auto-enrolment – this would bring an additional 1.4 million women in pension saving.
- Auto enrolment contributions on every pound of earnings – this would improve pension part-time workers who are more likely to be women. This would increase pension wealth by 140% at retirement.
- The introduction of a family carer’s top up– would help about 3 million women and 300,000 men top up their pension pot.
Women taking time out to care are compensated in the State Pension by State Pension credits, however, they miss out on auto enrolment. The family carer’s top up would see the government pay the equivalent of the employers’ contribution at National Living Wage level into women’s pensions who are taking time out to care. This would equate to approximately £820 per year and would boost women’s pension outcomes by 20%. The family carer top-up can close around half of the pension wealth gap created by taking time out of work to care for family.
- Ensuring that pension funds are always considered in divorce settlements – approximately 10% of men and 14% of women in their early 60s are divorced. The median pension wealth of divorced men and women by retirement is £103,500 and £26,100 respectively. These figures compared to the population indicate a pension wealth reduction of a third for men but a half for women, signifying a greater impact of divorce for women than men.Although pension pots can often be the second most valuable asset when people are going through a divorce, they are often overlooked, with people paying more attention to property assets.In 2018, there were 118,142 divorces but only 4,632 pension attachment orders were made by the family courts.
- Greater action on the availability and cost of childcare to enable those that want to return to work– Despite tax changes that help families with childcare costs, prices continue to rise. The Family and Childcare Trust reported in 2018 that childcare prices for children under three had risen above both inflation and wages in the previous year. Costs grew by 7% to £122 for 25 hours per week, equating to £6300 per year. Analysis of freedom of information request data by Insurer Royal London shows the high cost of childcare means working parents with toddlers pay more for childcare than their mortgage. A full-time nursery place for a child under two typically costs £1,065 a month, for example, while the average monthly mortgage repayment is £1,040 and the equivalent figure for renters is £833.
Joanne Segars, Chair of Trustees at NOW: Pensions and ambassador of Insuring Women’s Futures, said, “Pension saving can be hard, especially for women who take time out of the workforce for caring responsibilities. NOW: Pensions is proud to support the CII Insuring Women’s Futures manifesto and sign up to the pledges to improve gender equality in our industry.
“The proportion of women working is now 71.4% which is the highest female employment rate since records began in 1971. Yet 81% of people working part time are women, which means they might not reach the legibility criteria for a workplace pension and so miss out on vital workplace savings.
“Policy and regulation around saving for retirement need to change to better reflect the changes in the workplace and society. We are proud to work alongside Insuring Women’s Futures and will continue in our efforts to generate awareness and help close the gender pensions gap.”
Notes to editors
** Taken for the 2019/2020 tax year