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More needs to be done to address under-saving among career-break women

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Written by: Sophie Ballard
02/02/2017
Last week the All Party Parliamentary Group on women and work called for companies to put better programmes in place for ‘returning women’. But what are the pension savings implications and what more needs to be done?

Many businesses are supportive of women returning to the workforce after career breaks, with a number of businesses already offering returner programmes in the UK. But more could be done with regards to long-term savings as the proportion of women in the UK saving adequately for retirement remains well below the levels of the male population. Research shows that only 52% of women have saved sufficiently for retirement compared with 60% of men.

We believe the ‘returner programmes’ should encompass all aspects of wellbeing; mental, health and financial. Many women who are included in the ‘sandwich generation’ having taken a career break, are more likely to have a shorter working career and therefore have less opportunity to earn and convert those earnings into pension savings. Career breaks are often within the optimum earning period between the ages of 30-45, when savings potential is at its highest and as such women can be further away from their retirement goals.

In terms of what the pensions industry can do to support women who have taken a career break, I believe we have to raise awareness of the impact of this loss in pension savings and call upon companies to offer greater guidance and support. We can increase awareness/education through providing more robust resources and toolkits to employees pre and post career breaks.

Companies and schemes need to ensure women are aware of the potential savings they have lost during their absence. Addressing these shortfalls requires a multi-dimensional approach at all levels from government policy, pension providers, employers and members themselves. One way to achieve this is by working with companies to improve their ‘returners’ communications to include information on implications on long term savings.

Initiatives to address under-saving among women could include:

  • Carers being able to earn credits towards auto-enrolment.
  • Student loan payments or childcare voucher payments defaulting into pension payments once they are no longer required.
  • Employers offering educational seminars which can focus around “finances for new families” highlighting the importance of communicating and educating the whole family or ‘household’ given that employers/scheme providers don’t always have a direct relationship with the primary decision maker.
  • Hosting savings bootcamps (a common practice in the US).
  • Or, auto-escalation schemes that encourage a savings increase to make up for missed contributions.

Given that a third of women are concerned about reaching their retirement goals and more than two-fifths of women state that they now intend to work for longer in full time roles to fund their retirement, increasing awareness and communication – as well as other initiatives – of the benefits of retirement savings among this ‘sandwich generation’ is vitally important.

Sophie Ballard is senior DC relationship manager at State Street Global Advisors

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