For the last century, at least, the moral aim of western society has been to create a culture of equality. Whatever your ethnicity, gender, abilities or sexual orientation there is a fundamental philosophy that states everyone should have access to the same opportunities and rewards.
We have come a long way, even in the last 50 years, but sadly it is still a work in progress. While much work is being done to address gender gaps, statistics show there is still a fair way to go. And the evidence relating to the differences in salaries and pensions between men and women can seem quite shocking, in an environment where we believe everyone should be treated equally.
Evidence of financial pay gaps
Work salaries and pensions to a large extent are joined at the hip. Whatever you earn plays a big part in determining how much you can save or put away for your pension. Also, with a workplace pension, a set percentage of your salary will be calculated as your monthly contribution. Therefore, by default, the smaller your pay-packet, the smaller the contribution.
What the statistics say
So, what do the statistics say? According to the Office for National Statistics there is still a huge gap in hourly earnings between men and women. In August 2020, the pay gap was 7.4% among full-time employees. If that study is increased to include all employees, then it becomes a whopping 15.5%. These figures can seem pretty stark, especially when it is clear after the age of 40 that gap continues to hover around the 12% mark1.
Inequality ultimately affects both men and women
These figures should concern men and women alike. Most of us want equality in all avenues of life. But it is more than that. As much as equality is about individuals, in western society where families and couples are at the core of our culture, individuals are rarely taking part in long-term savings just for their own benefit.
We want our financial rewards to ultimately benefit our spouses and families too. We all want to drive towards a situation where we are all financially secure in our later years – so to do that we also need to look after each other.
Can this gap really be breached?
While progress is being made, it can be glacial at times. Governments, organisations and society as a whole need to embrace new legislation and attitudes for change to be meaningful. These things are not always in our control, and the societal shift can take time.
However, when it comes to your own finances, there are things you can control: changes you can make that should put you in a stronger financial position, both now and in the future. Let’s look at some ideas to help you offset that imbalance:
Get the ball rolling fast
Start saving long term as soon as possible. The easiest way to do that when you begin your career is through a workplace pension scheme. Your employer will take the necessary actions to arrange a pension fund and also pay a set percentage on top of your contribution as well. As it is taken out of your pay packet at source you do not have to worry about the hassle of getting it all started.
Consider lump sum contributions
You can increase monthly payments, or you can always bump up your pension fund by giving lump-sum contributions. With the latter especially, you are keeping the amount you put into your pot in-line with the amount of time you are working.
Switch to a new deal
You may have other personal or private pensions aside from your workplace scheme. You can always make sure you are getting the best deal out there. Whichever fund or provider you decide to go with, you can rest assured that whatever gender you may be, rewards and options offered will be exactly the same. However, do you know that the pension plan you have is the most efficient for your needs?
Many people just let their pensions bubble along in the background with little understanding of what returns they will be getting, what options and benefits are available and how all of this may or may not meet their long-term needs. By taking an active interest in your pension fund you can monitor growth against your changing life requirements for the future.
Portafina provide regulated financial advisers who can check your pension at any time. They will guide you through your options, the complexities of the reward system and match your requirements to other plans which may be available on the market. This way you are maximising what you will receive when you retire.
Track down previous pension pots
Workplace pensions are great because they get you saving early in your career and offer extra contributions from the government and your employer. Don’t forget to harvest the money you have saved throughout your career. Keep a track of pensions you have paid into in different jobs – this is your money and is available for when you retire or to invest in other pension plans.
Register for child benefit
If you have to be away from work to care for a child, make sure you claim child benefit. It may be that you will not qualify because of other income coming into the house, but if you claim, you will have a chance of receiving National Insurance credits (while you are not contributing to your pension).
Check out pension arrangements before maternity or paternity leave
Many employers now offer paid maternity leave but does this mean that the company will continue to make contributions to your workplace pension? Make sure you understand what part pensions will play in your maternity/paternity leave package.
Look after your State Pension
Don’t forget your State Pension. It may offer smaller rewards, but it is just as important as any workplace or personal pension. If you are away from work, National Insurance credits, which you receive through claiming benefits, contribute to your pension. And, of course, you can top up your State Pension through your own contributions or through a lump-sum payment.