Should working moms get a pension boost?
The Pensions Policy Institute and U.K. consumer advocacy group Which? are teaming up to recommend to the U.K. government that working mothers should receive a top-up to their pensions in an effort to close the pension gender gap.
The groups’ analysis found a woman in the U.K. who took time off for childcare responsibilities would put an average of £68,000 towards retirement, whereas a woman who didn’t take that time off would average out at £83,000. The analysis suggested a single £2,000 addition to their pensions would boost that savings significantly over time.
In Canada, organizations are paying more attention to how their total rewards programs can be part of their overall diversity and inclusion initiatives, including making the gender pay issue a top priority, says Ofelia Isabel, a managing director at Willis Towers Watson. “It’s an interesting time in our history because this is now top of mind and employers now recognize it as a business imperative.
“Women have been in the workforce for a really long time, but the pay gap in Canada, depending on how you measure it, earn 69 cents or 87 cents on the dollar that men make,” says Isabel. “It’s persistent even though women have been around for a long time [and] women get more degrees. And when you think about pension plans, the way that we’ve structured them, is they’re all based on pay. It’s a contribution based on your pay or it’s a formula that’s based on your pay.
“So if the gap is there from a pay perspective, the gap is going to be there from a pension perspective. And then you add in the fact that women will be the ones who are taking the [maternity] leave, which in the grand scheme of a career, is a really small period of time. But they do mean a loss of earnings and a loss of pension.”
In order to solve these problems, Isabel says Canada is likely to see more creative thinking, such as the proposal in the U.K. “It’s hard to discover the things that are causing them problems without getting a little bit uncomfortable, without facing the fact that as much as we’ve tried in the past to make it fair, it’s not working.”
In looking at total rewards with a gender lens, more employers are realizing the importance of certain benefits, like fertility assistance coverage, adds Isabel. “You’re already seeing that happening on the benefits and the pay side. We haven’t yet really seen it on the pension side.”
As employers become more well-versed in gender-specific issues, they’ll get better at noticing gaps and pay more attention to how they can close them, she says.
“I think employers are looking for ways to really differentiate themselves, to really have potential talent look at them and say, ‘Wow, this company is doing something different.'”