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Addressing the gender pension gap

As we approach International Women’s Day, a campaign to celebrate the achievements of women globally, it’s important to reflect on the progress that’s been made towards gender equality in the workplace. At the same time, we must also recognise the inequality and discrimination women still face and the long road ahead towards gender parity.

One key issue that still demands our attention is the gender pension gap – the gulf between how well-prepared men and women are for retirement. This gender gap has loomed over the pension sector for decades. And as the cost-of-living crisis bites, the issue is becoming more acute.

My Pension Expert’s recent survey of 2,000 UK adults found that 61% of women say the cost-of-living crisis has made retirement seem impossible – compared to 49% of men. Further, only 29% of women are confident that they will retire at their desired age.

In the fight for gender equality, ensuring women are equipped to achieve the retirement of their dreams is vital.

Bridging the gender pension gap

Addressing gender disparity in the pension sector is complex and will require a coordinated, sustained effort from the government, employers, and the pension industry to address the problem.

Of course, wage gaps play a significant role. Equal pay will be one of the biggest foundational changes needed to eradicate pension gender disparity. It is vital that businesses review their internal policies and develop a strategy to close their organisational gender pay gap. Businesses must implement important changes, from allowing women access to equal opportunities for career development and promotions to ensuring they are paid the same as their male counterparts within the same role.

As of April 2022, government data showed that among all full-time and part-time employees, men earn on average 14.9% more than women. Although progress has been made – the pay gap is down from 26.9% in 2002 – encouraging more transparent reporting on gender pay breakdowns within organisations is a critical step for bringing the issue to employers’ attention.

Further, more must be done to help female employees engage with their workplace pension, assess the state of their savings and understand the potential benefits of increasing their contributions. According to our research, just 26% of women say that they have savings and plans in place to sustain their current lifestyle in retirement. A long-overdue simplification of the pensions system and introduction of the pensions dashboard will play a crucial role here.

Access to advice

But we must also ensure that independent financial advice is accessible to women. Indeed, our research found that only 13% of women have sought financial advice to help them manage their finances during the cost-of-living crisis, compared to almost a quarter (23%) of men.

An independent financial adviser can help individuals understand the current state of their pension savings, as well as how they can ensure they will have enough to live comfortably upon retirement.

An adviser will review the entirety of their financial situation and future goals, and develop an appropriate savings strategy.

It is therefore vital that the government, regulatory bodies and advisers themselves do more to ensure women – and indeed UK savers in general, know where they can go to find affordable advice. Of course, this is one element of a highly complex issue. Nevertheless, it will mark an important step in the industry’s efforts to close the gender pension gap and help women achieve the financially secure retirement they deserve.

The gender pension gap is a complex issue that will require significant effort and time to make meaningful progress and begin narrowing the gap. While waiting for the government and businesses to address critical issues such as the pay gap, given the ongoing cost-of-living crisis, women who are worried about their retirement finances should consider seeking independent financial advice. This will enable them to develop a solid savings strategy and ensure the retirement they deserve.