Action is needed to close the gender pension gap - Christina Bowyer

Data published by the UK Department for Work and Pensions suggests that the gender pensions gap sits at around 35 per cent. While the government says it has a plan to shrink it, the practical impact will be limited without wider change.

Christina Bowyer, Partner and Head of Pinsent Masons Pensions Services

The recent Mansion House proposals by Chancellor Jeremy Hunt are aimed at improving retirement outcomes for defined contribution (DC) pension scheme members. They suggest pension schemes offer a range of decumulation services, help consolidate small pots, standardise the assessment of DC default funds, extend the use of Collective Defined Contribution and explore using surplus to fund DC arrangements.

While these proposals may help DC savers overall, they will not address the gender pensions gap specifically. To really help close the gap, ministers must identify why women have less pension savings, and take action to support change.

According to the latest government statics, the median gender pay gap is 9.71 per cent and as long as this disparity exists, women will see less money going into their pensions savings compared to men.

The Fawcett Society reports that key drivers to the pay gap include continued pay disparity, failure to promote women – undervaluing and underpaying the work women tend to do - such as social care and childcare – and a lack of women in higher paid sectors such as technology and engineering.

Evidence shows women are more likely to become carers and provide more hours of unpaid care than men. All of this can lead to women taking lower paid jobs than men, taking career breaks and working fewer hours overall.

Studies show women are more likely to suffer from “imposter syndrome” in the workplace than men. This could have an impact on women’s confidence to go for higher paid roles and they may lack confidence to negotiate better salaries compared to their male peers.

There is now more research and profile in relation to the gender pay gap, gender pensions gap and diversity - this is a positive move and should help with a cultural shift in society, the workplace and the pensions industry.

The pandemic was a watershed moment for working patterns moving away from full-time office-based working and introducing flexible working policies. Enhanced paternity leave policies, in addition to the government's shared parental leave policy, have been on the increase for some time.

These steps should help spread work and home life responsibilities more equally between men and women. If used well they should also help women continue working during their peak employment time, work more hours and feel empowered to take more skilled and/or executive positions. This may also lead them to pay more into their pension savings.

There is lots to do if the gender pensions gap is to be closed completely. The Mansion House proposals are good news for DC pension scheme savers, but wider changes must continue so that the gap in retirement outcomes between men and women can end.

Christina Bowyer, Partner and Head of Pinsent Masons Pensions Services