A new report says that women are at risk of losing out more as we live longer, unless the government takes steps to address this. The report, by a think tank called the Social Market Foundation, looked at different moments in women’s lives when they can lose out financially, compared to men. Among its recommendations, it says the government should pay into women’s pensions when they take time out of the workplace to care for children or elderly relatives.
Here are the ‘moments’ in women’s lives that the report looked at and what it recommends that the government do.
FULL DISCLOSURE: The Social Market Foundation report is looking at six different ‘moments’ in women’s lives. These moments were recognised in a report that formed part of the Chartered Insurance Institute’s ‘Insuring Women’s Futures’ initiative. I’m involved in this initiative on a voluntary basis. It’s designed to improve the financial resilience of women and I think it’s a great idea!
Moments 1 & 2: Training/studying and starting or re-entering the workplace
Women do well at school and university, but fewer girls/women than boys/men study STEM (science, technology, engineering and maths) subjects. These subjects can lead to higher paying careers.. And while the gender pay gap is small or non-existent in early working years, it widens as women get older.
Moments 3 & 4: Relationships, motherhood and becoming a carer
The divorce rate is declining for couples under 45, but not for older couples. The report quotes official government figures that show that married couples over 50 have three times as much pension as the average divorced woman over 50.
Women are increasingly having their first child later in life, which could mean they are less affected by the gender pay gap. This is because they should have longer to establish their careers. However, women are still more likely to be expected to care for elderly relatives.
Moments 5 & 6: Later life, retirement and ill health
Things like the gender pay gap, plus the fact women are still much more likely than men to take time out of work to look after children, affect women’s pensions and retirement plans. Women who can’t carry on working because of their caring commitments will not only lose out on a workplace or private pension, but will may lose out on state pension credits as well.
What the report recommends
The report says that the government should take some specific steps to improve the financial wellbeing of women and to reduce gender inequality. In particular, it should:
- Give employees the right to request flexible working from the first day. At the moment, you have the right to ask if you can work flexibly once you’ve been in your job for at least six months. The Social Market Foundation thinks this right should apply from day one.
- Get employers to spell out if jobs can be done flexibly or part time, in the job description. This often doesn’t happen at the moment. To be honest, I’m not even sure many companies think of it.
- Get employers to publish their pension policy when advertising job vacancies. From my very unscientific look at a few job vacancies, some didn’t mention the workplace pension at all and a few describe it in vague terms. For example, by saying that the pension is ‘contributory’. This means you have to pay money into it, but the job description doesn’t say how much you have to pay in or what your employer will pay in for you.
- Pay the (private/workplace) pension contributions of women who leave work to have children or care for a family member. At the moment your employer must pay into your pension for you during the first 39 weeks of maternity leave. Beyond that, they can pay into your pension for you, but they don’t have to.
- Get the financial regulator, the Financial Conduct Authority, to publish data on what people do with their pension pots when they retire. This data should be broken down by gender.
What you can do now
It’s possible that the government may introduce some of the measures outlined above, but – at the moment at least – much of the focus seems to be elsewhere! But there are things you can do now to try and improve your financial situation:
- Find out if you can work flexibly. Not all employers offer flexible working, but some take a more enlightened approach. Sometimes employees aren’t aware of their right to ask for flexible working, or are afraid that doing so will damage their career prospects. You can find out about your rights when it comes to flexible working in my article called Your right to ask for flexible working.
- Find out if you can pay extra into your workplace pension. If you’re employed or on a contract, the chances are that you’ve been automatically enrolled into your employer’s pension scheme. If you can afford it, find out if you can make extra payments into your employer’s pension. Ask if your employer will also pay into your pension if you do this.
- Don’t miss out on things like Carer’s Credits. If you care for someone for more than 20 hours a week, you may be able to get national insurance credits towards your state pension. You can also get credits if you have children – up until your youngest child is 12 (as long as you register for Child Benefit). You can find out more in my article called Getting National Insurance credits if you’re a carer You can also watch my short video called Why registering for Child Benefit will help build up your state pension.
You can read a summary of the report, or download the report in full, on the Social Market Foundation’s website.
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