Several reports released this month suggest that despite our best efforts the gender pay gap does not seem to be closing. The Fawcett Society cite the pandemic for slowing down progress in this area. They have reported women were more likely to lose work or be burdened with childcare and home-schooling responsibilities due to the COVID-19 crisis, and despite women accounting for 71% of the UK’s front line workers, women’s wages remain 11% lower than men. The Office for National Statistics also reported that more women than men were furloughed in 2021 which of course, resulted in a loss of pay.
The Gender Pay Gap Regulations 2017 (‘the Regulations’) required all private and voluntary sector employers with 250 or more employees to publish data on their gender pay gap – and those first published statistics grabbed the headlines, with many companies suffering reputational damage. However, today, in light of the gendered economic impact of Covid among other things, we wonder whether the current reporting is fit for purpose?
Changes to gender pay gap reporting needed
Broadstone believes the Regulations could be changed to reflect more of the workforce – currently only half of the workforce are employed by larger companies and so, in effect, the Regulations are not covering 50% of workers. In addition, it has been found most part-time roles are performed by women which does contribute to the gender pay gap, and therefore publishing the gap between full and part time pay would underline any inconsistencies in pay policy. Finally, while reporting is all well and good, without reference to publishing an action plan to redress a large imbalance, is there any point to reporting in the first place?
The gender pay gap is also the pension pay gap
The result of this gap in the long term is that women will not only lose out on pay during their working life but will also lose out on pension payments during their retirement. The gender pay gap is also the pension pay gap as detailed in a new report from Aviva. Based on the workplace pension employer and employee contributions of just over 2 million savers and retirees, it found the gap between men and women’s pension contributions for 35 to 39 year olds is 18%. It then increases to 23% for 40-44 year olds and 29% for 45-49 year olds. It then stretches to 35% for 50 to 54 year olds.
This is the reason why it is so important to ensure your female employees consider their pension contributions as early as possible. At Broadstone, managing effective and precise communications is our priority. Our two-way communications process is designed to ensure that employees understand their options, can engage, and ask questions to understand the value of what is being provided by their employer. For women in particular, an important message is not just about paying what you can afford now but also reiterating the importance of increasing contributions as they go through their working life, and at key strategic life points.
We know that when a woman (and though this affects all employees, it is more often women) decides to work part-time to take on the role of carer for example, it’s highly unlikely she will be thinking of the pension implications for herself of that decision. Retirement seems a long way off and calculating your affordability to cover current outgoings is normally the main challenge on your mind. This of course is the same challenge for all savers at various points – as a young person, you have other priorities such as saving for a mortgage, paying off a student debt, raising a family and paying for childcare and so on.
Ways to close the gap
Education, information and communication on pension planning should be a key part of your role as a responsible employer. Part-time employees should be encouraged to increase their monthly contributions if they can afford it. In addition, staff should understand that before reducing working hours, they should consider not just the impact on their current earnings, but their future income from their pension savings. Strategic information provided at the right time can make a world of difference to the financial and life outcomes of your staff. And, of course, employees should look at providing policies that support parents through their wider employee benefit strategy or employee value proposition.
Active consideration of the diversity of your pensions education and engagement strategy can also form an important part of your diversity and inclusion strategy more broadly, and of course contribute to the ‘S’ in your corporate ESG (Environment, Social and Governance) policy.
If you would like to level up your pension communications and engagement for employees, Broadstone can help you design an action plan that works for your business.