Bridging the pensions pay gap

Bridging the pensions pay gap

Equal pay recently hit the headlines in the UK when it became compulsory for firms with more than 250 employees to disclose their gender pay gap information.  News, being what it is, has moved on, although it seems reasonable to expect that the topic of equal pay (or not) will hit the headlines again in the next review, scheduled for April 2019.

The pay gap and retirement

While it is perfectly valid to discuss the causes of the pay gap and to see what actions can be taken to minimize it going forward, the fact of the matter is that any changes which may (or may not) happen in the future, are not necessarily going to have an impact on the past or the present.  In other words, women are going to have to make the most of what they do have and prepare for their retirement as best as they can.  It’s also worth noting that while the pay gap figures reveal a disparity between women’s pay and men’s pay, not all men are high earners and lower-paid men are arguably in a very similar situation to women.

Reviewing retirement

Before getting too pessimistic about the situation of women and the low paid in retirement, it may be cheering to note that social and lifestyle changes could help to go some way to mitigate both the gender pay gap and the issues facing lower-paid men. For example, although increasing life expectancy could, in principle, increase the pressure on pension savings, if people are remaining healthier for longer, they could also potentially work for longer, thus counterbalancing the effect longer life spans.  

Of course, this issue is a bit of a controversial topic, since there is no “one-size-fits-all” approach. People in stressful and/or highly manual jobs might not be capable of continuing in them beyond their official retirement age and might well feel that they have earned the right to go straight into work-free retirement rather than just switching one form of work for another.  At the same time, people in jobs they enjoy might be quite happy to continue in them. There are all kinds of variations in between these two points, such as seasonal/occasional working and/or part-time working or participating in the gig economy.

Good financial management in the present can ease your path to retirement

Another point worth noting is that, regardless of what gender you are or how much you are paid, good financial management in your early life can be advantageous to your retirement.  Consider two situations.  Situation one, you take out debt during your working life and are unable to pay it off before you retire.  Situation two, you take out debt during your working life and have it all paid off before retirement.  Obviously, in situation two you will have more of your retirement income to spend as you wish, and this may have an influence on what kind of lifestyle you will lead including whether or not you will be under financial pressure to keep on working in some capacity.

The earlier you start planning for retirement, the longer you have to prepare

Savings you make in your twenties and thirties have decades to do their work, even savings made in your early forties have at least a couple of decades to mature into income. Hitting your mid forties may not exactly be the point of no return for retirement savings, but it is a point in your life where preparing for retirement should probably become a serious concern, especially if you do not already have any meaningful retirement savings. In fact, if you find yourself in your mid forties or later and have not already taken steps to secure your post work future, then, regardless of your gender, you should aim to make it a priority to get professional advice on your situation and see what can be done to improve it.

If you have any questions please contact your local Charles Derby Financial Adviser today on 0800 849 1279 or email This email address is being protected from spambots. You need JavaScript enabled to view it.