A new study from equality think tank, the Fawcett Society, has found that young women are typically relying on their partners to provide financial security in retirement, with a projected 40% pensions pay gap expected. It attributes this disparity to women reducing the amount they invest in retirement savings in order to cover rising childcare costs. 

The findings supports research by investment service company Scottish Widows, which found there to be a clear shortfall between men and women in their 30s, when it comes to developing retirement savings. Data from its Women and Retirement Report 2015 shows that 43% of women have little to no understanding of individual pension savings. 

As a result of these findings, fears are mounting that women won’t be self-sufficient in retirement, and that a lack of confidence in making financial decisions in an industry traditionally dominated by men, will continue to be a barrier. 

Why the retirement needs of women differ from men 
In order to effectively help female employees change their saving habits, it’s important to understand the unique challenges that affect the financial success of women in the workplace. 

With the government hailing auto-enrolment as a great success, thanks to 2015 figures showing that 52% of women are now saving “adequately”, the Office for National Statistics (ONS), paints a somewhat different picture. For in order to be eligible for auto-enrollment, earnings need to be above £10,000 and ONS data shows that around 25% of the female workforce don’t earn enough to qualify. 

The same data paints a bleaker picture. The gender pay gap for full-time employees, based on median earnings, is 9.4%, and when part-time employees are included, the gap grows to 19.2%. 

In spite of the Equal Pay Act being introduced in 1970, and the Equality Act of 2010, 2016 research from recruitment company Robert Half suggests that British women are likely to earn around £300,000 less than men over their working lives. 

Women are also living longer, meaning that their pension funds will have to last them, on average four years longer than men’s. According to the World Health Organisation’s 2015 European Health Report, British women are expected to live until approximately 82.7 years, and men 78.8 years. 

Statistics from Age UK, the UK’s largest charity for older people, show that 16% of pensioners (1.8 million) live in poverty, and with the gender pension gap so pronounced, single female pensioners are more likely to be at risk of retirement poverty than both single male pensioners and retired couples. 

Four ways employers can help 
To help mitigate the low saving rates, career breaks taken to raise children, and unequal pay, there are several things employers can do to help female staff overcome the barriers they face when it comes to saving for retirement. 

• Promote childcare support 

As covering the cost of childcare has been a key factor attributed to the pensions gap, employers should encourage all staff to explore the government schemes available, such as Tax Credits and the free early education and childcare scheme for all 3-4 year-olds in England. 

Employers can further help by investing in childcare vouchers and other salary sacrifice or benefit schemes – some of which have generous tax efficiencies for both employers and employees. 

• Encourage shared parental leave and paternity leave 

Encouraging all employees to take parental leave, and offering extended paternity leave when a child is born will greatly benefit women in the workplace. 

Increased flexibility will encourage higher rates of women returning to work, and will help ensure female gaps in employment are shorter. 

• Champion fair pay and opportunities 

To avoid the gender pay gap becoming a pensions gap in retirement, employers can actively do more to ensure female staff are paid fairly compared to their male counterparts and get the same opportunities for advancement to senior roles. 

In 2018 the government will introduce new rules on pay transparency for businesses with over 250 employee, requiring them to publish their gender pay gap figures. Follow in the footsteps of companies such as Tesco, Friends Life, PwC, AstraZeneca and Genesis Housing who have released their figures in recent years. 

• Provide independent financial and pensions advice

Educating employees and providing independent advice will give them the confidence to make informed decisions about their retirement planning. 

Communicating the benefits of workplace pensions and matched contributions, while educating female staff on other saving options will equip them with the right tools to secure their financial future. 

To learn how we can help your employees with cost-effective and fully regulated advice, click here to find out more about Pension Wizard.