Recent research has shown that in some regions of the UK, women will retire with half the income men do. This is a frightening statistic and one that many women will be unaware of until it’s too late.

Historically, we know that there were a lot of things women weren’t allowed to do and in many instances the laws to change these were only passed relatively recently. For example, it wasn’t until 1975 that women could open a bank account in their own name (god forbid – why would they need to?). And it wasn’t until even later in 1983 that the Equal Pay (Amendment) Act was put in place allowing women to be paid the same as men for work of equal value. And we’re still feeling the effect of these attitudes today. According to Statistica in 2021, the gender pay gap in April 2021 was 7.9% for full-time employees, compared to 7.0% in April 2020 and 9.0% in April 2019.

Although things have progressed in many ways the legacy of inequalities and biases still continues. A report from the Money and Pensions Service in 2019 showed that “fifty years after the Equal Pay Act, only 57% men and 78% women think pay inequality is very wrong (equal pay for equal jobs).” And if you don’t have equal pay it’s impossible to bridge the pension gender gap. These inbuilt attitudes only increase the size of the task to reduce pension pay inequality.

Mind the gap

There are a number of causes of the gender pension pay gap including:

  • Less savingsAt retirement on average men have saved more into their pension pots. The reasons for this include:
    • Women taking time away from work or reducing the number of hours they work to look after children or family. Even in the UK, care largely remains the responsibility of women. 
    •  Women on average earning less than men.
    • Financial literacy tends to be lower for women which impacts savings decisions. 
  • Gender bias – the pension system itself was set up on the basis that men were the main breadwinners and that women stayed at home and looked after the children. It doesn’t take into account women’s working patterns or the impact of divorce –  working on the assumption that the pension is paid to the husband to support his wife and children as well. 

Equal opportunities

The introduction of auto-enrolment was hugely successful in getting people to join their Company pension scheme. Using the power of the status quo bias; our tendency as humans to stick to the default. However, it only applies to workers earning over £10,000. Again, this is more likely to exclude women as more women work part-time to care for children or other family members. 

This is highlighted further when we look at the impact the pandemic had on our savings. A study from the leading discount site has revealed that more than 35% of women relied on dipping into previous savings compared to just 15% of men. 

In addition, women on average are shown to be less financially literate than their male counterparts. This is regardless of cognitive ability, education or salary levels and may partly be explained by the difference in confidence levels between men and women. Women are less sure when making decisions about financial products and services and research has shown that many women feel that they are talked down to when it comes to financial information which then impacts how they engage. Women tend to score lower than men in financial numeracy tests. Again, this may be due to confidence as men are more likely to be overconfident and comfortable to guess an answer rather than choosing ‘don’t know’. Women have been shown to be more cautious, with a fear of getting the answer wrong.

So what can we do to help close the gap? 

The combination of communicating information in a way that overlooks these issues combined with historical bias can impact how women save for the future. Many organisations are calling on the government to act fast to reduce the gap. This includes requests for the government to provide a regular report to Parliament on the pension pay gap and the plans it has in place to tackle this – as well as a reform of auto-enrolment.

In addition to statutory changes the bigger and more pressing task is ensuring women are educated and feel empowered to make financial decisions. Many women that could be saving more aren’t doing so because they don’t know that they need to, or they feel that they don’t have the knowledge to make the right decision. Targeted communications need to focus on the issues and concerns that women face in a way that is relevant, easy to understand and takes account of historic biases. Financial education is critical in readdressing the balance to give everyone the confidence to ask questions, understand the information they receive and feel empowered to make informed decisions. 

Our lives are never static, they continue to change and evolve as new discoveries are made and we learn more about the world around us. Past human biases and behaviours can, however, take centuries to change and continue to make an appearance even in the most modern setting. Ultimately, breaking down the gender barrier is not about making everything the same, it’s about empowerment – giving everyone the tools and help they need to make the best decisions based on their individual circumstances. 

This also means recognising that not everyone will need the same tools or information – people will need different support at different points and this is not necessarily based on age or gender. Pension schemes need to really understand their membership so that they can tailor communications to provide clear and relevant information using the right channels at the right time.

At MakingGiants we’re data huggers and number crunchers that love to delve deep into understanding your audience to create tailored impactful communications that really resonate. We would love to have a chat with you to share how we can help support your communications. Contact us via the links below.