When I first started working in the pensions industry almost nine years ago, pre-children and in a full-time position, I was blissfully unaware of what the gender pensions gap was.
Fast forward to last year, when I returned to work following the birth of my second child, acutely aware that my decision to work part-time will directly impact my retirement savings. I know about this because I work in the pensions industry and I have a greater than normal interest in my retirement and how I’ll fund it. Many other women aren’t so fortunate.
I’ve chosen to work fewer hours to allow me to spend some time with my youngest daughter until she starts school in a couple of years, and I’m not alone. So many women choose to do the same, others have no choice but to work part-time due to childcare or the lack of.
There is a problem, however, which lies in the lack of information surrounding the consequences of these decisions, which can come to light long after our little ones have flown the nest. It’s a contributing factor to the gender pensions gap, a difference in the amount saved which means that the typical female pensioner is £7,000 a year worse off than a man the same age.
The research New Choices, Big Decisions – 5 Years On1 shows that part-time female workers in their forties and fifties would benefit from targeted communications from pension companies explaining what the impact of working either a day or two extra a week would have on their pension savings.
The ground-breaking study by the consultancy Ignition House, who interviewed volunteers at length about their attitudes and behaviours towards retirement, showed that some of the women interviewed hadn’t fully understood what the implications of working part-time would be on their pensions savings. Many had continued to work part-time once they’d the opportunity to increase their hours again. In fact, of those interviewed, women were more likely than their male counterparts to be in part-time work both at retirement and in the lead up to it.
The report is the latest in a series that examines the impact of Pension Freedoms since 2015. It recommends that workplace pension providers should explore the possibility of communicating with female members who work part-time, in their mid-40s and beyond to explain the ramifications of not having up to an extra two days a week of work would have on the size of their pension pot.
It’s clear that the gender pensions gap cannot be bridged by the pensions industry alone. It requires the government to do more to enable women to return to work or work more hours once they have children. Enabling the provision of better, more affordable childcare would be a huge step here, but I’m under no illusion of just how big a task this would be.
Do I think the pensions industry could do more? It’s not unreasonable to ask whether providers should be looking at ways in which they can communicate to female workers how they could increase the size of their retirement pot and remind them of the impact of extended periods of part-time working.
I’ll be upping my hours again once my children are older, many others will make the decision not to. Either way, the industry owes it to all women to enable an informed decision so that when they do retire, they have no regrets.
Read the report, New Choices, Big Decisions – 5 Years On.