The Pension Protection Fund (PPF) has exceeded targets set out in HMT’s Women in Finance Charter! Professional Pensions report that 48% of the senior management roles within the PPF are now held by women. This kind of demographic change should, hopefully, lead to some cultural changes in organisations.
Culture has an important role to play in reducing gender pensions and savings discrepancies. Much of what causes these inequalities is related to cultural and employment norms around caring behaviour.
We know that prior to child-bearing women have levels of pension saving more commensurate with the population average. In fact, savings gaps reduce between ages 16-24 and ages 35-44, but then increase afterwards.
| 50th Percentile | ||||
| Age | Women | All persons | Difference | Percentage difference |
| 16-24 | £ 2,000 | £ 2,400 | £ 400 | 17% |
| 25-34 | £ 7,000 | £ 7,900 | £ 900 | 11% |
| 35-44 | £ 22,500 | £ 24,700 | £ 2,200 | 9% |
| 45-54 | £ 39,500 | £ 47,700 | £ 8,200 | 17% |
| 55-64 | £ 59,900 | £ 68,800 | £ 8,900 | 13% |
| 65+ | £ 40,000 | £ 70,000 | £ 30,000 | 43% |
| All | £ 17,500 | £ 20,600 | £ 3,100 | 15% |
| 75th percentile | ||||
| Age | Women | All persons | Difference | Percentage difference |
| 16-24 | £ 6,800 | £ 8,200 | £ 1,400 | 17% |
| 25-34 | £ 23,500 | £ 24,900 | £ 1,400 | 6% |
| 35-44 | £ 80,000 | £ 85,800 | £ 5,800 | 7% |
| 45-54 | £ 152,200 | £ 184,700 | £ 32,500 | 18% |
| 55-64 | £ 213,800 | £ 245,000 | £ 31,200 | 13% |
| 65+ | £ 113,800 | £ 171,000 | £ 57,200 | 33% |
| All | £ 80,000 | £ 91,000 | £ 11,000 | 12% |
Therefore, something is happening between ages 35 and 44 which leads to reversals in saving trends. Women tend to have their first child around the age of 31, so the mid 30s to early 40s will be the key child care years. At the moment, women are the primary caregivers for children. Leaving work to care for a newborn and returning part time, or full time with caring responsibilities, generally leads to lower incomes and lower pension contributions (the motherhood penalty).
Women with children progress more slowly in their careers than men. This is not necessarily a result of pernicious or active discrimination. For example if full time promotions are being offered, those off work caring, or working part time, will naturally not be considered and/or won’t apply, and mothers who work full time may not feel they have the bandwidth to manage more challenging roles while also caring for young children.
Here’s where the cultural element comes in – if men left work for a similar amount of time as women to care for newborns and also juggled caring responsibilities with work, work culture would inevitably have to change. Time out and flexible working would become standard for a greater number of employees and the impact on women specifically would be reduced. A parenthood penalty could not be applied as easily to the whole population. Promotions and career progression opportunities would be provided more equally as men would be more likely than they are now, and women less likely, to have to forgo these at any given time in order to prioritise caring.
This type of change could also help to reduce the gender pay gap, as women would have more opportunities to pursue the kinds of careers that men without primary caring responsibilities have now.
This is not a change that we could effect overnight. However, pay gaps and job selection trends aside, these cultural elements, both at work and in caregiving, will continue to result in retirement income disparities by gender. Policies tackling the gap need to have a tranche of action designed specifically to influence culture.
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