It’s International Women’s Day, which means it’s the annual focus day on the gender pay and pension gap.
Rightly so, but the feeling that we’ve been here before many times makes it slightly more depressing every year. Not least because PwC says the gender pay gap is actually getting worse in the UK. This year, PwC has placed special attention on the motherhood penalty and pointed to a Trades Union Congress study showing that women with children earn 7 per cent less at age 42 than women without.
There’s no fatherhood penalty, though: dads earn 21 per cent more than men without children. It seems that having mouths to feed is a negotiating point in pay rise discussions for men only.
Given everything women and in particular mothers are up against, it’s frankly amazing they manage to pay anything into their pensions at all. Their daily to-do lists are so long and so focused on everyone else’s needs that even getting to the ‘increase pension contributions’ bullet is an achievement.
It’s an achievement that this is even on women’s to do-lists, in fact, because in addition to the motherhood penalty, mothers are afflicted with something else – what I call a ‘martyr mentality’, which means that when you are a mother, you almost always automatically do things for others over doing things for yourself, whether that’s cooking, washing, clothes shopping or saving money.
Putting yourself first is hard when there’s a dependent need at every turn. So it’s an absolute wonder that women are managing to make even a tiny bit of headway on their own pensions. But according to PensionBee data, they are.
For this International Women’s Day, PensionBee has published customer data showing that while women are still contributing less than men to their pensions – with annual average contributions 28 per cent lower at £1,890 a year, compared with £2,513 a year for male customers, the trajectories are encouraging: the average value per contribution has risen by 11 per cent over the last six years for females, compared to a 21 per cent decrease in the average value per contribution for male customers.
What’s more, all female age groups have increased their average contributions per year in the last five years, with the exception of the over 60s.
What’s interesting about this data is PensionBee is not a workplace pension provider – the increases can’t be attributed directly to pay rises bringing the percentage auto-enrolled contribution up. They are a result of women consciously choosing to put more into their personal pots. These increases are a concerted effort.
That means proper green shoots because it’s evidence of a shift in priorities, of a recognition of the importance of saving into your pension, backed up by action. The message that women need to take ownership of their own pension provision is being taken to heart. This is progress.
It’s not all green shoots. Clearly, the contribution gap is still huge. Since the pandemic, male customers have been making more frequent contributions than female customers, who were making more frequent contributions than men in early 2020 (although generally, the frequency of contributions for men and women has risen, it has risen by more for men).
This points to a dampening pandemic effect on women’s ability to make regular contributions, perhaps reflecting the impact of lockdowns on their earnings. Also, bearing out my ‘martyr mentality’ hypothesis, it seems that each year, before Christmas, female customers’ contributions dip slightly while male customers’ do not. Who is buying all the presents? And is that money coming out of savings? It looks to be the case.
I wish women didn’t have to strive so hard to reach equality in all ways. But on pensions, it might not be as hard to close the contributions gap. Based on these figures, an extra £50 a month could bring women’s average contributions to the same level as men’s.
That’s not the same as closing the overall gender pension gap, because it refers only to those women who are making contributions, not those who aren’t able to contribute at all because they are out of work. It’s the caring years where the gap takes root.
Arguably, we’d need to see women’s contributions go higher than men’s to demonstrate that they are actually closing the gap and making up for the lost years. Women’s pension contributions now need to shift gear and move from catch-up mode to overtake. This might look more like £80 to £100 a month extra on average, depending on how many years of work have been missed.
This would require yet more focus and prioritisation, more women putting their own future financial security first just a bit more. That’s not to let the Government off the hook for all the policies it needs to put in place to give women a properly equal footing. But while we wait for those policies, sisters are starting to do it for themselves. That’s something to celebrate.