In what they are calling “gender-blind economic policy”, the Women’s Equality Party has called on the government to finally do something to correct the pensions gender pay gap, which it says are forcing retired women into poverty.
This is in accordance with research carried out by Mercer – the world’s largest human resources consulting firm – which found that women in the EU can expect 40% less than men in their retirement. A far higher discrepancy than the national pay gap, which currently sits at around 16%.
Calling for urgent action in order to improve gender equality, Mercer assert that these findings are a global economic imperative with deep social and economic implications.
As to causes, the report points to three key areas:
– Underrepresentation of women in the workforce, the gender pay gap, and ‘family related’ career breaks.
– An inflexibility in current pensions systems.
– Risk aversion and a lack of confidence in women’s retirement planning.
In addition to lower employment rates, women in the EU labour force are under-represented at all career levels. This increases as the career level rises. Projections even suggest that if current trends in hiring women continue, this is unlikely to change at all in the next 10 years.
Most EU pension systems offer retirement benefits linked directly to accrued income. However, given that women tend to earn less than men on average this leads to lower pension payments for women. This is further compounded by the fact that women are more likely to work part time and have taken career breaks to start a family, or caring for relatives. On top of this, most countries have limits on employees “catching up” on contributions.
According to Mercer’s report, women tend to be less confident about their financial capabilities, and be more cautious than men are on average. A complex argument which drills down into the core of gendered socialisation, they make an argument for the fact childhood attitudes towards money and confidence manifest in adulthood and tend to affect women’s financial decision making.
So what can be done about it?
According to the report, there are three main areas that employers should be tackling:
– Accelerating gender diversity efforts and focus.
– Reviewing benefits plans and communications through a ‘gender lens’.
– Communicating, educating and raising awareness of the gender pension gap.
Which is exactly what leader of the WEP, Sophie Walker, has been taking charge of. Calling on the government to take heed of these findings she said:
“Today, we see the direct result of a political failure to act on the pension gap. Women’s pension poverty is unequal and unfair. We have long called for a universal flat rate of pension tax relief to encourage women to save, that would in turn fund free childcare. It’s time for an end to gender-blind policy-making. Young women come out of our education system into jobs that often pay less.
“They are then far more likely to take on caring responsibilities that take them out of the workforce entirely or see them move into lower paid and part-time roles.
“In addition, women often pay for childcare from their take-home pay, and therefore save less. Often those in work are less likely to benefit from auto-enrolment.
“The current pension system fails to see this, leaving women less able to contribute to and claim a decent pension. It is simply not fair that people who earn more get a higher pension top-up from the tax man.
“It’s time for a policy making that really sees women.”
Sentiments that I am fervently behind.