Financial security

Caught in a gap

By Standard Life Centre for the Future of Retirement

December 01, 2022

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The impact of women’s life events do not just affect their finances today, but can also affect their financial futures, as lower earnings result in lower pension contributions over time.

We have partnered with the Institute for Employment Studies (IES) on two reports to explore women’s finances through the lens of the workplace and outline a set recommendations for employers and the government to incite meaningful change to support women’s ability to save and close the gender pension gap.

Why are women saving less for the future?

The gender pay gap already disadvantages women’s future finances because it means they are more likely to be contributing less to their retirement savings than their male peers.

But our research found that this disparity is actually made worse by typical events that happen over the course of a woman’s life, which makes it more difficult for them to save for the future.

Life events such as menstruation, motherhood, divorce, childcare, menopause and caring responsibilities can all disproportionately affect a woman’s earnings at different stages of their working lives.

Our key findings show that:

The gender pay gap is a significant contributor to the gender pension gap, yet women on average contribute a larger proportion of their salary to their pension.
On average, women are contributing a higher percentage of their monthly income into their pension than men up until middle age – 6.1% compared to 5.8% aged 35-44.
By middle age – where care responsibilities fall to one in four women in the UK – men are paying almost £80 more per month into their pension than women.
Women are more likely than men to fall under the auto enrolment threshold (35% vs 11%). Automatic enrolment closed the contribution gap in participation but increased the gap in terms of contribution.
Women are more likely to be economically inactive due to long-term health conditions than men.
There is limited awareness among employers of the causes and consequences of the gender pension gap. This has resulted in a lack of action over and above the statutory minimum allowances that seek to improve the savings capacity of women across the different life stages.

The government and employers need to reform current policies and practices to ensure women's finances are fit for the future.

Our recommendations to help women’s future finances

Employers are in a unique and powerful position to tackle these issues. Here are five key policies our research has found would make a significant difference to the Gender Pensions Gap and that we are recommending employers introduce:

Re-enrol workers into pensions schemes annually, rather than the statutory three years.

Ensure employer pension contributions continue during periods of parental leave.

Adopt a minimum of five days unpaid leave for those with caring responsibilities, and where possible, five days paid carers leave.

Make flexible working the norm from day one and highlight this across all job roles.

Ensure workplace health policies offer explicit and visible support for reproductive conditions such as miscarriage, fertility treatment, for those diagnosed with endometriosis and managing menopause symptoms.
Decisive action is needed from the government to support businesses, individuals and improve pension policy. Our recommendations should spark cross-departmental government action for a meaningful improvement to the gender pension gap. The below are five key recommendations:

Widen the coverage of auto-enrolment by lowering age and earnings eligibility threshold.

Review the advice and guidance boundary so that a larger population can access tailored and reliable financial support.

Legally require employers to provide information on how contractual changes impact pension contributions.

Revisit the Carer’s Leave Bill to ensure that unpaid careers can access up to ten days statutory paid leave.

The legal right to flexible working should be available from the first day of employment, and the number of reasons to reject flexibility should reduce from 8 to 2.

What Phoenix Group is doing today

Phoenix Group is already implementing the above recommendations for employers, and we have also committed to do more:

Monitoring and analysing the (monthly) pensions contributions of male and female colleagues across Phoenix Group and report on the Gender Pension Gap every year.
Working with our clients to devise a standard analysis and reporting methodology. We will promote this across the pensions industry to drive up awareness and improve women’s future finances.
We also have a variety of policies in place to better support women in the workplace including:

A comprehensive approach to reproductive health support, including time off for endometriosis and menopause
Ten days paid carers leave for all colleagues
£15,000 of fertility treatment under Personal Medical Insurance cover
Six months paid parental leave for all parents
All new roles both advertise and promote flex work

Download Employer Report

Download Government Report