While we await government reforms on pension policy and wider industry change to tackle the gender pension gap, I find myself asking one question: what action can be taken right now?
More specifically, what steps can employers be taking to make small, yet potentially effective, changes?
The most widely discussed initiative is for employers to educate staff on the pension choices available to them when embarking on parental leave, which is still predominantly taken by women and takes a heavy toll in terms of the pensions gap.
Prior to the parental leave, employers should communicate the risks that are often associated with contributions made during parental leave. In particular, the impact of reduced contributions during this period on their long-term financial security.
Making this information more widely available in the workplace will enable those embarking on parental leave to consider and reflect on their pension saving options, and whether to maintain their contributions. This provision of information need not stop once the employee goes on leave, but could usefully continue throughout the period, even if this is an extended one.
Another piece of education is informing employees of their ability to top up their non-working partner’s pension. This will prevent the primary carer’s pot from suffering a gap in contributions during their period of leave, or if they do not return to work. Taking this step ensures that the cost of having a family is equally shared between the couple and does not fall primarily on the main carer.
Informative sessions or literature should also be available on an employee’s return, outlining the ability to pay additional amounts, and quantifying how these can cover any missed contributions.
These aspects of education can also be built into the financial wellbeing training and resources offered by an employer.
Alice Honeywill is a partner in the pensions practice at law firm Burges Salmon