New research into the gender pension gap has forecast a 90-year-long waitlist for equality from 2024, with the gap to persist until the year 2114 according to the current trend.
The research, from pension advisors Almond Financial, analysed trends in the gap over the last 18 years, from its highest peak in 2006 to the lowest figure to date in 2024, to estimate when the gap is set to close for an entire generation in the UK.
The largest gender pension disparity ever recorded was in 2006 when the gap soared to 42%. This has reduced to 35% in 2024, which means it has taken 18 years for the gap to lower by 7% – closing at an average annual rate of 0.39%.
Based on this trend, it would take around 90 years from 2024 for the gender pension gap to close completely, in the year 2114.
This timeline would mean many people alive today would not be around to see gender pension equality, leaving questions as to why.
The reasons behind the gender pension gap are complex, and can’t be solved overnight. Although it is largely influenced by the gender pay gap, the gap also persists due to wider workplace issues and cultural norms that lower the average salary for women.
Government intervention since 2006 has given women more opportunities to save for retirement. However, more can be done than is required of employers by law to bring forward the due date of gender pension equality.
What can employers do to close the gap?
With the new Employment Rights Bill, employers will have a greater legal responsibility to improve equality across the workplace, although there are many non-mandatory actions that companies can take to close the gender pension gap at a faster rate.
Sam Robinson, Principal Financial Adviser at Almond Financial, shares four tips on how employers can help bridge the gender pension gap, with the aim of bringing forward the due date for equality.
Enhance pension contributions
“Addressing the retirement shortfall in workplace pensions is a key priority for closing the gender pension gap, especially for lower-income workers. According to Almond Financial’s Retirement Shortfall Report, the average UK worker will have a shortfall of £115,768 should they base their retirement income entirely on workplace pension pots” Sam explains.
Introducing a contribution match scheme can encourage employees to save more for their retirement. Also, providing more than the statutory 3% contribution of annual salary, without the need for employees to increase their contribution, would boost retirement savings significantly across the board.
Encourage shared parental leave
Caring responsibilities are a key driver of the gender pensions gap, causing one in ten women in their 30s to leave full-time work – compared to just one in 100 men in their 30s.
“By promoting shared parental leave within your company and encouraging men to take their full entitlement, you can support women in returning to work sooner with full pay, which boosts their ability to save for retirement,” says Sam.
Improve maternity pay
“Insufficient maternity packages can severely cut into women’s earnings and retirement savings, especially for single mothers relying on one income and those with multiple children, who may resort to debt to get by,” says Sam.
Despite this, over a quarter of private sector companies still provide only the minimum statutory maternity pay, leaving more than 2.5 million women to miss out on enhanced income support – compared to just 115,000 in the public sector.
Provide company share schemes
“Introducing a company share scheme, and offering this to all your staff regardless of position, opens the door to significant levels of income that can transform lives and the ability to save towards retirement,” Sam explains.
“For anyone unsure of their financial future or want to have an effective plan for their retirement, it’s worth speaking to a qualified financial advisor.”
To view the full research, visit: https://www.almondfinancial.co.uk/the-uk-gender-pension-gap-report/
