Pension provider PensionBee has revealed that the 38% gender pension gap it identified could be closed if men and women worked the same number of paid hours at equal pay.
The current gender pay gap is caused by unequal annual paid working hours, where women are more likely to have reduced employment time due to unpaid caregiving and housework responsibilities. The costs of childcare mean one parent, often the mother, tends to leave or scale back paid employment.
Based on its policy intervention models, PensionBee discovered that if men and women were to work equal hours at equal pay, this would close the gender pay gap.
They found that if men and women were to work the same hours, at an average of their current hours, with men working less during their late twenties to thirties and late fifties to early sixties, the gender pension gap could be eliminated, enabling women to increase their pots by more than £106,000, whilst men’s pots would decrease by only around £33,000. This would also boost the overall amount in a heterosexual couple’s joint retirement pot to £812,827, equating to over £70,000 in extra pension savings.
PensionBee has committed to the Association of British Insurer’s initiative to increase transparency around parental leave policies and pay in the insurance and the long-term savings industry. They have criticised the Government’s Shared Parental Leave policy, adding that it “does not offer adequate financial support” where uptake is a dismal 2%.
In contrast, Sweden has more robust parental leave policies where all parents are offered 90 days of non-transferrable leave at 80% of their salary, where take-up for men is around 90%. Similar policies in the UK could ensure that all new parents, including same-sex couples, could take home a bigger shared pension pot at the end of employment.
PensionBee also cites “a lack of transparency” around the parental support offered by large UK employers, which makes it difficult for workers to select an employer that offers sufficient support. They believe that greater disclosure of parental leave packages from companies could help solve this issue.
Clare Reilly, Chief Engagement Officer at PensionBee, said: “For too long, the onus has been put on women to close the gender pension gap by changing their behaviour. This is not fair or effective. Policy interventions are required to normalise male participation in caring responsibilities, to free up more of women’s time to participate in paid employment. Employers must act now by providing supportive parental leave packages to all new parents, regardless of gender, and transparent, easily accessible information on parental leave and pay policies.”
PensionBee’s parental leave policy can be found via its careers page here, which offers 110 days of full pay to all new parents regardless of gender. To read their full report on the gender pension gap, click here.