BLOG: How to solve the issue of pensions and the ‘lagging ladies’?

Written by Natalie Tuck

Next Thursday, 8 March, is International Women’s Day, the date that was plucked out to celebrate the social, economic, cultural and political achievements of women.

Unfortunately for women, however, recent reports suggest there is little to celebrate about our retirement achievements. One exception was a release celebrating women leading the way in longer working lives, which I’m sure 1950s born women (who had their state pension age increased without being told) would find distasteful, or ironic at best.

Alas, last week Now Pensions published a report on how women are more likely to opt out of auto-enrolment than men. It explained that women, more likely to be part time workers and lower earners, might simply not “feel” they can afford it. “For these groups, arguably more needs to be done to drive home the value of the employer contribution, tax relief and the tax free lump sum,” said Now Pensions CEO Troy Clutterback.

Then, Pension Monster put out a release that said women are still “lagging behind” men when it comes to pensions despite the success of auto-enrolment. And why are we lagging ladies? According to Pension Monster national accounts director Peter Bradshaw, it is because of the career breaks and part time jobs women tend to take throughout their working lives, and that we show less engagement with our pension options. The resolution, Bradshaw says, is for women to seek ongoing guidance and support.

Bradshaw, was likely alluding to his own company’s services, but a little more support and ongoing guidance from the industry, might actually help us lagging ladies. Clutterback was not wrong in his statement on how more needs to be done to raise the importance of employer contributions and tax relief, but the choice of words is so important.

‘Lagging’, for example, has such negative connotations that link with failure; its synonyms include dither, loiter, fall back and delay. And the choice word of ‘feel’, just serves to show how out of touch the industry can be. Imagine telling women in low-income jobs that they might not feel they can afford to contribute, but we know better and they can really. Neither is going to empower women to save for retirement; the language needs to change.

Of course, its not just down to the industry to help women save for better retirements, the government has a big part to play. Last month, Baroness Burt of Solihull asked the government whether it intends to encourage employers to continue contributing to an individual’s automatic enrolment pension fund during maternity leave and carer's leave. The government chose not to directly answer the question, instead merely stating the facts.

Responding, Baroness Buscombe said that workers on paid contractual leave can opt in to workplace pensions if their earnings fall below the threshold and if they do so they are entitled, under the Pensions Act 2008, to an employer contribution provided they have a sufficient level of earnings. Employers may also provide additional contractual entitlement to pension contributions for their workers in these situations. But what if the government had said yes to the question?

Encouraging employers to continue making their contributions while their female employees take time out for maternity leave or carer’s leave would surely help. Women are too often penalised for taking career breaks, with lower pension savings being one consequence, but change can happen, and it should. So as we approach International Women’s Day, I ask the industry to think carefully about the language it uses with women, and the government to start a campaign encouraging employers to continue making pension contributions for women (and men) during paid career breaks, regardless of whether the salary meets the auto-enrolment threshold.

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