Many will be familiar with the gender pay gap; fewer will be aware of the gender pensions gap.

The gender pensions gap (GPeG) was highlighted in a government report 'The Gender Pensions Gap in Private Pensions', published on 5 June . What is it and how can it be reduced?

What is it?

The GPeG is the inequality in percentage terms between male and female private pension saving which is not yet in payment around normal minimum pensions age (currently 55). The overall GPeG is 35%.

Private pension for this purpose includes workplace pensions and personal pensions but does not include the state pension. The GPeG figure is the overall figure according to the most recent data (2018 to 2020). This has fallen from 42% in 2006-2008. Those without any pension saving are not included in the report – the GPeG would of course be larger if they were. It is intended that the GPeG will be published annually going forward.

A ‘complex phenomenon’

As with many things related to pensions, the report describes the GPeG as a “complex phenomenon within the context of the pension system, labour market design, and personal circumstances”. That is undoubtedly true, however the result of the GPeG speaks for itself – there is a significant gap.

In terms of participation in pension saving, it is hugely positive that pension saving has increased for both men and women since the introduction of auto-enrolment in 2012 and will hopefully continue to do so with the proposed extension to auto-enrolment eligibility.  But what can be done to close the gap in the amount of pension saving?

Closing the gap

When I was reading my colleague recent blog on the gender pay gap, I was reminded that many of the reasons that a gender pay gap exists (such as females more commonly taking time off for childcare, career breaks, working part time etc.) are the same reasons why the GPeG exists.

Breaks from working, and/or working fewer hours or at a lower salary, directly impact the amount of money going into a pension. Some commentators refer to females being “penalised twice” as a result of both gaps (pay and pension). Therefore, reducing the GPeG needs much more than just a pensions focus.

In her blog, Laura notes that recently published ONS figures show that progress to close the pay gap is slow and employers need to do more if we are to see an improvement.

Employers taking the steps suggested would positively impact the GPeG as well as the gender pay gap. These steps include offering and encouraging flexible working to make roles more accessible to women who are more likely to be balancing unpaid care and family commitments and, of course, to encourage men to take on such responsibilities through flexible working as well. This “lies at the heart of addressing the gender pay gap”.

Also important is raising awareness through training programmes to equip employees with the knowledge and tools to recognise and address sources of inequality. Ensuring that females are equipped with an awareness of the impact on their pension of any changes to working arrangements is key. Awareness and engagement is at the heart of encouraging pension saving generally.

Government help would be needed to alleviate the impact of factors contributing to the gap that are out with an employer’s control, such as childcare costs.  The pensions minister, Laura Trott, has confirmed that her commitment to measuring the GPeG annually will “help shine a light on the issue of the gender pension gap, allow us to track progress, and most importantly of all, encourage efforts to reduce it”.

Reducing the gap will take a collective effort from the government, industry, and employers. Let’s see how much can be done before next year’s GPeG report.

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