Better pensions education for women
Why aren’t women saving enough into their pensions?
The gender pay gap
As highlighted by recent reports, the gender pay gap is still significant, and clearly this will affect women’s capability to save adequately for retirement. If you have less income to allocate to the same total amount of expenses, you either have to reduce your spending, or prioritise some items over others.
It can be very difficult for any individual to set money aside for the future in favour of paying costs in the present. For example, if you have debts to pay then it might make sense to pay these off rather than putting money away for the distant future.
Maternity leave, career breaks and working part time
The Scottish Widows Women and Retirement report 2017 highlighted that motherhood is a significant factor affecting a woman’s pension savings. There are several reasons for this:
Taking time off work take care of children
The cost of childcare
Working part time
All of these issues not only affect an individual’s ability to save for retirement, but as priorities change pension savings can often take a back seat.
In addition to this imbalance, those who work part time may not earn enough to qualify for automatic enrolment1, meaning that they may not be saving anything into their pensions!
Other pension savings considerations for womenIf female employees are relying on their spouses to save for retirement then they need to understand their rights. The number of marriages that end in divorce in the UK is still high, and although they may not want to consider it as a possibility, women in this situation need to be aware of their rights. It is crucial for all individuals to understand their legal rights in a divorce when it comes to pension savings as they are high value assets.
Better pensions education for women
Many employees, not just women, do not fully appreciate the importance of saving for retirement, and in particular, starting early. But because women have more financial issues with which to contend, they need to understand how to make the most of their pay. Women are also already at a disadvantage in the workplace; and this coupled with a lack of pensions education is a recipe for retirement disaster.
You can provide different types of education to suit all of your staff; such as face-to-face workshops, individual clinics, online education, or even financial advice. Often a combination of all these can work well.
Pensions education tailored specifically for women is likely to be successful and effective. We have found that face-to-face education is very effective when the delegates are peers who are in a similar position and have similar issues to address. See our case study on under 30s education here.
For those individuals who do not qualify for automatic enrolment, education is all the more important. Scottish Widows have called for the automatic enrolment minimum salary and age threshold to be lowered so that it is more inclusive for women and young people2, and will allow them more years of saving. But it’s also important to ensure all employees are engaged with their pension savings and understand the benefit of them. Auto-enrolment ensures that employees save for their retirement, but it does not mean they will be engaged!
You can help your employees to understand that they can, and should, opt-in to their workplace pensions and that they don’t need to wait to be auto-enrolled. You can also provide education to ensure that all employees understand the importance of saving for retirement and the things they might need to consider.
- YouGov April 2017
- Scottish Widows Women and Retirement Report 2017