Gender Pension Gap and How You Can Help Close It

The issue of gender equality has been around for a long time and is regularly getting widespread coverage across the media (click here for a recent example). In fact, the REC published a report in which looked into gender diversity and the role of good recruitment (if you haven’t already read the report you’ll find it here).

The gender pay gap is well-understood within the recruitment industry and with the recent introduction of compulsory reporting has meant it is now receiving a good deal of attention from employers and employees alike. However, the gender pension gap has been largely ignored until recently and the gap between men and women in this area is even more pronounced – women at the age of 65 have an average pension fund just 1/5^th the size of their male counterparts[1].

Earlier this year we published a guide to closing the gender pension gap, its causes and what can be done to tackle it. Some of these steps we can take as individuals or family units, however, there are key areas where employers can make an important difference, and here are two examples:

• Workplace pensions
  All employers are legally obliged to offer a pension scheme to eligible workers over age 22 who earn more than £10,000 a year and contribute to it on the employee’s behalf. Employers can choose the basis on which they calculate pension contributions ranging from qualifying earnings (least generous) to total pay (most generous). By choosing total pay you maximise the contributions made by employee and employer – to the benefit of all eligible employees. Employers should maximise take-up by ensuring new staff inductions make clear the benefits on offer and the importance of saving for retirement. Employers should also have a robust process to deal with leavers so that individuals don’t lose track of their pension pot when they move on.

• Maternity leave
  Mums-to-be should be warned that they could miss out on employer pension contributions and tax relief if they leave the pension scheme while on maternity leave. This is particularly important if membership of the scheme is on a salary sacrifice basis because you, the employer, are required to maintain the full pension contribution for the duration of maternity leave, not just while on Statutory Maternity Pay (SMP).

There are many other ways in which working women, their families and their employers can help narrow the gap. Perhaps the simplest is to focus on education – of the workforce and as an organisation. As the old saying goes forewarned is forearmed – a good awareness of the consequences can enable employers and individuals to make better choices.

You could start by downloading LEBC’s Gender Pension Gap Guide.