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October 18, 2022

Bridging The Gender Pension Gap: How To Improve Women’s Engagement With Retirement Planning

Bridging The Gender Pension Gap: How To Improve Women’s Engagement With Retirement Planning

By: Helen Hollister

Statistical evidence shows a marked difference in engagement between men and women around pensions and retirement planning. It also demonstrates that women have average lower pension pots and will live around two years longer than men. How can we encourage more women to engage with pensions planning?

Looking at a sample of 25,000 plans, the split is hugely skewed ‒ 82 per cent male, 18 per cent female.
We help people build plans for saving and retirement. These plans help our users know how much to save up and how much to take from their pensions each year, alongside everything else they may have, to provide the retirement income they want, without running out of money.

We try to attract both men and women equally. However, despite this, we see markedly more visitors who are men. Cost is not an influencing factor as there is no charge.

When it comes to engagement, Caroline Hopper, from the communications specialists Quietroom, provided some great thoughts and insight below on how this may be improved.

There’s a clear need to better engage women with their pensions, she says. The question is ‘how?’ Aside from fixing the many societal structures and biases that disadvantage women financially in the first place, we can reframe pensions.

Research shows many women don’t feel confident enough to make decisions about their investments or pensions – so let’s change that. We can use inclusive, positive messaging that guides people through what they need to do and shows that ‘people like you’ do this. That’s proven to make people more likely to engage.

We also need to go to the places and channels where the women we want to reach are already active. It might mean going to Facebook or Mumsnet, taking those positive messages and conversations to where these people are already engaged.

As an industry we need to do better in engaging females because there are a number of other issues which statistically are likely to apply more to females.

Why should females become engaged?
Our site statistics show that the average pension pots entered on our systems by females are 40 per cent less than the pots entered by males.

Like the ‘earnings gap’ which can exist in employment between the sexes, there can also be a ‘pensions gap’ in retirement.

This gap should not exist, but unfortunately, it does. Women are, on average, likely to have significantly less savings than men to put towards retirement. This is further supported by research from ‘Insuring Women’s Futures’ by the Chartered Insurance Institute and considered by PensionBee’s research into how to close the gender pension gap.

In addition, and to compound matters, on average, women will live around two years longer than men, making them likely to need more savings.

Finally, there are a number of ways that both sexes can lose valuable state and other pension benefits, but statistically, this applies more to women. It can be very easy to lose these benefits without realizing it until it is too late or costly to resolve.

Reduced Workplace Pensions
For both men and women, taking a career break or reducing hours through part-time work will have an immediate effect on pension savings built up in the workplace. You may not be accruing benefits or saving into a pension pot if you take a career break. You will also likely be saving less if you return to work part-time.

In a study by the Office for National Statistics, which defines couple families as either married, civil partnered, or cohabiting adults with dependent children, researchers considered the split where one partner worked full time and one part-time.

This showed that in 44.1 per cent of couples, a man worked full-time and their partner was employed part-time. In three per cent of couples, a woman worked full-time and their partner part-time. This may change over time, but currently, it is statistically much more likely that a woman will be working part-time within a couple than a man, if one does work full-time and one part-time.

It is relatively easy to understand that if you work part-time, you will build up lower pension benefits, but what is not clear to many is the effect these periods can also have on your state pension.

Reduced State Pensions
The full state pension is very valuable and, for both sexes, can make up a large proportion of retirement income.

The full state pension in the UK is paid if you have accumulated 35 years of National Insurance (NI) contributions. If you have less than 35 years, it is prorated. If you have less than 10, you get no state pension at all.

Most people pay NI contributions through work. Given this, most people think of the 35 years in terms of time that they are working. If you leave the workforce for good or for a period of time, you will, therefore, not be paying NI contributions through work.

If you are claiming child benefit, this is not an issue, as by claiming child benefit, you also get an NI credit for the year. However, if your partner earned over the limit, the child benefit is lost. This can be addressed by either paying back the child benefit or deregistering, i.e. opting out