According to research undertaken on behalf of The Telegraph, women will have to contribute 3 percentage points more than men to secure the same level of pension income in retirement. This is because on average women earn less than men over the course of their working life and as such they need to contribute more to their pension pot to ensure they receive the same income when they come to retire.
If that wasn’t worrying enough, the Fawcett Society, a charity that campaigns for gender equality and women’s rights, predicts that the gap is actually going to be far greater than this. According to their CEO the gap could be as great as 40 percentage points thanks largely to the career breaks many women take to look after children. During these spells away from work the majority of women do not continue to contribute to their pension. It is worth noting that women can still pay in to their pension whilst on maternity leave and they can also make voluntary national insurance contributions which would help mitigate any gap. The reality for many women however is that they simply cannot afford to make pension contributions whilst they are on maternity leave and therefore there is little they can actually do to reduce any gap.
As most employers now know, the first gender pay gap reports have to be published by April 2018. This means that businesses with 250 or more employees have to report on their mean and median gender pay gaps, mean and median bonus pay gaps, proportion of men and women receiving a bonus and the number of men and women working across four salary quartiles. Whist there is no requirement to provide any commentary to accompany these reports, we are advising all of our clients to take the opportunity to include a written narrative to explain any gaps and to set out the steps they are taking to close any gaps. For more information please contact Sarah Scholfield.
Pay gap means women must save 3pc more to get the same pension income