Breaking down barriers for women and pensions

With more people entering the labour market than ever before and an increasing number of women in our workforce, it’s never been as pertinent to consider how we can address the gaps driving disparities in pension incomes and retirement planning, said Standard Life’s head of technical Solutions, Sinead McEvoy.

Around 42 per cent of women feel uncomfortable talking about money with family or friends, while 29 per cent of men feel the same way. More than a quarter (26 per cent) of retired women today say they regret not starting a pension sooner.

The gender pension gap is the sum of many parts, of which the pay gap is one. And then the roots of the pay gap are wide-yielding and complex, nurtured by structural, cultural and policy factors.

McEvoy said that broadly speaking, but of particular significance to the industry, we need to really consider how men and women participate in the labour market.

“Generally, women will move through the labour market differently; theirs is a journey marked with milestones such as maternity leave, childrearing, or caring for a family member, all of which will impact their income and inevitably impact their pension. Are we designing plans that account for career breaks, income fluctuations and longer lives?” she said.

Further research from Standard Life highlights how attitudinal differences could be leaving women short-changed in retirement. The findings published in Standard Life’s retirement study Bringing Retirement into Focus show that, despite exhibiting strong intentions for retirement planning, the confidence to engage with the financial aspects, namely their pension, is lacking.

Four in ten (41 per cent) women feel confident that they’re making the most of their pension versus 52 per cent of men. Just over a third (36 per cent) feel confident that they’re taking advantage of the available tax relief.

“Pensions continue to be shrouded in complex language and the reward for engagement is intangible,” said McEvoy. “It’s easy to kick the proverbial can down the road when retirement seems like a far-away concept, and you’ve got childcare, education and a mortgage to consider. Very often, the peak years for retirement planning coincide with the most demanding time in many women’s lives.”

Standard Life recently launched a Women and Pensions programme that focuses on inspiring new thinking to tackle such barriers.

“We’ve been on a mission to encourage people to reimagine retirement and retirement planning for some time,” said McEvoy. “Pensions and retirement can be daunting. It’s why we developed Second Life; a platform that encourages and empowers people to re-imagine retirement and what it can mean for their future selves.

“If you can make it tangible, you can move to the tactical, like: how am I going to fund this? We leverage this thinking in our Women and Pensions series, using insight to identify opportunities for better engagement and exploring communication strategies with advisers.”

How are women expected to fund this when everything appears to be stacked against them now?

“I’d start by controlling the controllables,” said McEvoy. “Do you have a pension in place right now? Over a quarter of retired women we surveyed said their biggest retirement regret was not starting a pension sooner. If you have a partner, have you discussed pension planning with them?”

McEvoy said she would always encourage speaking with a financial adviser – their job is to give impartial, trusted guidance.

“A good financial adviser will help you understand what products and solutions are best suited to your needs and circumstances, ensuring cost, flexibility and range of supporting investment options have been considered.”

Are we even close to closing the gap? Is the industry doing enough? “There’s a lot of work ahead to achieve a more equitable retirement journey, but we’re taking steps,” said McEvoy.

“The Gender Pay Gap Information Act 2021 increases visibility and dialogue at an enterprise level, although without a national publication we’re currently at risk of missing the bigger picture.

“As for the future introduction of auto-enrolment, there are concerns for how the proposed ‘one-size-fits-all’ system will serve the diverse needs of the modern workforce and particularly women.

“However, the plan has provoked more robust conversations more consistently in the public arena, which is welcomed. Policy reformation continues to reshape the pensions landscape with the aim of simplifying and harmonising products.

“The recent changes implemented in the Finance Act this year have improved the Personal Retirement Savings Account (PRSA). Tax relief can now be claimed on employer contributions. This enhancement now effectively aligns the product with how other pension arrangements are treated. Additionally, it’s portability makes it an attractive option for those looking for flexibility throughout their retirement planning journey.”

Research highlights that women believe retirement planning is important, said McEvoy. “78 per cent view having a pension as essential and more than half (56 per cent) view saving for retirement as a priority. Evidently the belief is there. We, as an industry, need to work on breaking the engagement barriers.”

Structural and cultural factors continue to drive pay and pension disparities. However, women can reduce the risk of being short-changed in retirement by understanding and addressing the gender-related divide in attitudes towards retirement, she said.

As pension and retirement specialists, Standard Life work with advisers to support the rounded conversations that are needed to help more people plan for better retirements. Search Standard Life Retirement Hub for access to award-winning content and helpful tools on retirement and pension planning.