• New research by longevity think tank Phoenix Insights reveals only one third (34%) of working women consider the impact of reducing their hours on workplace pension contributions, compared to nearly two thirds of men (62%).
• Despite women being more likely across their lifetime to take extended periods of leave* – just 36% consider the impact of reducing their hours on their pension pot.
• More than half (54%) said they would think more about their long-term finances if their employer engaged with them on their pension.
• Three-quarters (76%) of women said it should be a legal requirement for employers to inform them about how monthly pension contributions will change if they reduce their working hours.
• Three-fifths of women (62%) say they are worried they will not be able to save enough for retirement due to the increased cost of living.
• Phoenix Insights, part of Phoenix Group, partners with the Institute for Employment Studies to highlight the critical role employers play in closing the Gender Pension Gap.

With the gender pension gap at 40% in the UK**, a new report launched today by Phoenix Insights and the Institute for Employment Studies (IES) shows how employers are in a unique and powerful position to narrow the gap and help women to build better financial futures.

The report, ‘Caught in A Gap: The role of employers in enabling women to build better pensions’, is published as new polling from the think tank shows more than half (54%) of women would like their employer to engage with them more on their workplace pension and three-quarters (76%) say it should be a legal requirement for employers to inform employees about how monthly pensions contributions change when reducing working hours. As the cost-of-living crisis continues to affect many, three-fifths of women (62%) say they are worried they will not be able to save enough for retirement due to the current economic environment.

The call for employers to engage women in their pension through the workplace comes as just one third (34%) of women who have reduced their weekly working hours have considered the impact on their monthly workplace pension contributions and 36% considered the impact of reducing their hours on their overall pension pot. This is despite over three quarters (77%) considering how reducing their hours will affect their monthly payslip.

Workplace contributions and the gender pension gap

Alongside more than fifty interviews with women and employers, the new report from Phoenix Insights and IES analyses the data from 40,000 households*** and shows that, on average, women contribute £102 per month less than men to their workplace pension, yet contribute a similar percentage of their salary (6%). By middle age (45-54), men are saving fifty per cent more into their workplace pension than women (£245 compared to £165 per month).

Women are also three times as likely to fall under the £10,000 automatic enrolment threshold than men (35% vs 11%), however in recent polling less than half (47%) knew they would not qualify for a workplace pension if they earnt less than £10,000, further demonstrating the need to provide better information in the work environment.

Catherine Foot, Director of Phoenix Insights, said:

“Many factors can affect women’s pension contributions, but from our research we know it can be exacerbated by life stages that can impact women’s earning power – such as taking time out to look after children, the menopause or long-term health conditions. It is vital for employers to step up and support women throughout their lives to make sure they are informed, provide nudges to engage, and offer flexibility at every opportunity. 

“We have partnered with IES to create five key recommendations that we hope employers can take away to enact real change – from proactively looking to re-enrol people who have opted out of their pension every year instead of three, flexible working from an employee’s first day, and putting women’s health at the heart of the workplace through inclusive health policies. We were set up as a think tank with a mission to transform the way society responds to the possibilities of longer lives - helping to close the gender pension gap and enabling women to succeed in creating better financial futures to and through retirement is a key part of that.”

Building better financial futures for women in the workplace

To support the launch of the report, Phoenix Insights polled more than 4,000 UK adults and found that more than half of women (64%) think their employer should be responsible for engaging with them about their workplace pension – a much higher percentage than those who believe the responsibility should fall to pension providers (26%) and pension services from the government (13%).

The opportunity to provide more information through the workplace is clear, with just 17% of women knowing that if they opt out of their workplace pension, it will be three years before their employer looks to re-enrol them again. Only a quarter (26%) know that a family member or friend could top up their workplace pension while they are on parental or maternity leave.

Abbie Winton, Research Fellow at the Institute for Employment Studies, said:

"Similar to the gender pay gap, the gender pension gap puts female works at a huge financial disadvantage and could contribute to higher levels of poverty among older women. Our research indicated that women are less likely to be automatically enrolled since they are disproportionately represented among those beneath the £10,000 threshold. 

"For women who do contribute, the value of their contributions remains restricted by the lower levels of pay they receive on average, despite contributing a similar proportion of their earnings to men. While we welcome initiatives that will help to address the gap, such as flexible working from day one, one of the key ways of tackling this challenge is for employers to ensure that they are making full-time opportunities accessible to more women by making flexible working the norm and advertising roles as flexible from day one."

The opportunity for employers – five key recommendations from the report:

1. Re-enrol workers annually, instead of every three years, to give workers the opportunity to re-engage if they have taken career breaks or have opted out because of a lack of affordability.
2. Ensure employer contributions to pensions continue for employees during periods of parental leave and actively highlight to all employees that partners, family or anyone else can make additional contributions to support. Throughout all life stages, employers should aim to set contributions at a level that will enable employees to achieve a good standard of living at retirement.
3. Adopt a minimum of five days unpaid leave for those with childcare responsibilities yearly, in addition to five days paid carer’s leave where possible.
4. Make flexible working the norm from day one and highlight this across all job roles. To further normalise flexible working, measures employers can adopt include encouraging all employees to be transparent about their working hours, encouraging senior male employees to visibly adopt flexible working, allowing for flexible working contracts to be changed more than every year and encouraging flexible working discussions at line management meetings.
5. Implement a holistic health management policy programme that outlines support available for reproductive health conditions such as miscarriage, fertility treatment, for those diagnosed with endometriosis and managing menopause symptoms.

Responding to the report and its recommendations, Phoenix Group, the UK’s largest long-term savings and retirement business, is making new commitments to:

• Proactively look to re-enrol employees not on the workplace pension scheme every year, instead of every three
• Make pension impact information compulsory when reducing working hours
• Monitor and analyse the monthly pension contributions of male and female colleagues across Phoenix Group
• Work with its workplace pension clients to devise a standard analysis and reporting methodology for measuring the Gender Pension Gap

In line with the above recommendations to better support women in the workplace, Phoenix Group also has a variety of policies already in place to better support over 8,000 employees across the UK, including:

• A comprehensive approach to reproductive health support, including time off for endometriosis and menopause
• Two weeks off for baby loss and up to 10 days off for fertility treatment
• £15,000 of fertility treatment under Personal Medical Insurance cover
• Six months paid parental leave for all parents
• Continuing to contribute to employee pensions during maternity leave
• All new roles both advertise and promote flexible work

Read the full report

Notes to editors:

* Women who currently work or have had a job in the past are more likely to reduce their working hours across their working lives than men (32% vs 27%). Opinium Omnibus Research based on 4,000 adults, November 2022.

** OECD

*** Understanding Society (ISER, 2022)