How Women in the UK Are Still Being Short Changed
51 per cent of working-age women worry they won't be able to afford necessities in their retirement
(The Future of Retirement: Bridging the Gap, HSBC: 2018)
The 10th of November marks the day that women effectively stop earning relative to men. We refer to this as equal pay day, although equal pay actually means that men and women are being paid the same amount for doing the same job - something which has been law in the UK since the Equal Pay Act of 1960.Instead, equal pay day refers to the issue of the gender pay gap. The gender pay gap is a measure of the difference between men’s and women’s average earnings across an organisation, rather than those who are simply in the same role. The UK’s current gender pay gap stands at 9.1%.
In April 2018, Personal Group published the report ‘Closing the Gender Pay Gap’ which discusses the link between pay and workplace happiness, the take-away being that women are far happier at work than men, despite being paid less.
However, we believe this is just a precursor to a larger gender pay timebomb. It seems that once women exit the workforce they find themselves far less content than their male counterparts (Guardian, 2017). It’s possible that this is when the realities of the gender pay gap come into play. A new report from HSBC reveals that half of working-age women across the world fear they will not be able to afford basics such as food and heating during their retirement.
In an interview with the Guardian in 2017, Jo Habib, who established the West Yorkshire Charities Board before retiring in 2013, stated that: ‘I’ve come to think that money is the most divisive aspect of retirement. When you’re working, you can have a quite different income from somebody else but you’re still equal. But once you retire, the difference between those who have big pensions and those who have small ones divides people who have previously been friends.’
Interestingly, this seems to be an issue more prominent for women, with 60% of working age women admitting to worrying about being unable to pay for their own care or medical bills in retirement, compared to 55% of working-age men (HSBC, 2018).
If this is already happening to women in retirement, what is going to be the case when today’s employees eventually exit the workforce. Final salary pension schemes are becoming rarer, care costs are rising faster than the state pension and retirement ages are moving further and further away, with someone entering the workforce today unlikely to retire until they are 75. Women tend to live longer than men yet find themselves far less prepared financially for retirement. Almost half (46%) of working age women around the world either don’t how much they have saved for retirement or have saved nothing at all.
However, yet again this could be due to the years of unconscious bias that have become so ingrained in both the workplace and wider society, as women around the world are still underrepresented in financial planning in the home, with men making most household money decisions.
Food shopping is the only part of household budgets where women have greater responsibility than men, with almost 60% of women having control over the weekly shop as opposed to 32% of men. Men still tend have more control over the couple’s savings, their investments, bills and major purchases (HSBC, 2018).
The lack of financial responsibility and the general opinion that finances fall into the masculine remit may be having a negative effect on women’s confidence in their ability to manage finances - with just 42% of women feeling well-informed about financial matters, compared to 54% of men.
Each gender’s views and opinions about retirement are equally as divisive with women spending most of their time caring for family members in retirement and men seeing retirement as more of a reward, spending far more time on leisure pursuits (Forbes, 2016).
Much like the Gender Pay Gap, the Retirement Gap must be remedied. Addressing this wider societal issue in the workplace through financial education could not only have a positive impact on employee financial wellbeing, but also on staff engagement as a whole.
Unfortunately, increasing staff engagement via a pension schemes is not always easy. While Pensions are one of the most highly rated employee benefits, they’re not the most flashy or fun, and convincing staff to pay out today to reap an unknown amount in 30, or 40, years’ time can be a hard sell.
The importance of staff engagement with their pension has not gone unnoticed, with 55% of firms believing that greater employee engagement with pensions will improve their ability to recruit and retain employees, along with supporting their succession planning. However, almost half of businesses say that their staff are not engaging with their pension offering (Aegon, 2018).
Financial awareness and education are key when it comes to engaging employees with their pension offering and improving their financial wellbeing as a whole. Raising employee’s confidence in their ability to proactively manage finances is also important in a business sense, as more financially stable employees have been shown to have far lower levels of emotional stress (Neyber, 2018).
It is important that any financial education tools are presented in clear and simple language, and that the message actually reach employees. Employees often become ‘communication blind’ to posters and announcements of new initiatives. For a financial education programme to eb effective you need to be able to cut through the noise and ensure that times and dates of any seminars or workshops, as well as their value to the employee, are communicated effectively. This can be achieved through utilising a single online point of access for the entire wellbeing offering.
Technology can be the silver bullet when it comes to increasing engagement with an employee benefit offering. It not only creates the opportunity for new and bespoke methods of communication, which can literally be pushed straight into the palm of an employee’s hand, it also allows for quick and easy access to benefits anytime, anywhere.
Ultimately, closing the retirement gap will require a long-term strategy of financial education, increased benefits communication, and a spotlight on pensions and financial education in particular. However, if women are not finding opportunities to progress to higher paying roles, their pensions will always suffer for it, so the issue of the gender pay gap must also be addressed.
There’s no quick fix for the unconscious bias that has become so ingrained in company culture and wider society, but the steps taken to aid its reduction and elimination will undoubtedly leave you with a happier, more engaged, more productive workforce, regardless of gender.
For more information on the gender pay gap, how it relates to workplace happiness, and how your business can help even the playing field, check out our report on Closing the Gender Pay Gap