Mind the Benefit Gap
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You will probably be aware of the Gender Pay Gap in the UK. It’s been forefront in the media for some time. The UK Government has addressed the issue through compulsory gender pay gap reporting for employers over 250 employees. However, what has not been addressed is the Gender Benefit Gap. Research shows that currently more men than women are in senior roles, men on average earn more, and more women work part-time. These factors contribute to an imbalance of benefit entitlement , spend and engagement. Many companies have taken, and are still taking, steps to reduce their gender pay gap. In this article we’ll cover ways on how employers can reduce the benefit gap and become more inclusive. So, what are some of the issues and how can you better support employees to bridge the gap?
The Retirement Wealth Gap
Did you know the inequality of retirement income pots of men and women is more than double that of the gender pay gap?
According to the latest research from Scottish Widows, on average women in their twenties today are already on course to retire with £100,000 less in their pension pot than a man the same age. What’s causing this inequality? For starters, most pension schemes are based on a percentage of salary and lower or reduced earnings will impact your pension pot. According to the Office of National Statistics (ONS) women are still more likely than men to be working part-time. 38% of women in employment in the UK work part-time, compared to just 13% of men. Reduced hours mean reduced pay and reduced pension contributions. And this is just one element! – Women are also more likely to take time out from work due to life events, such as starting a family or caring responsibilities. As an employer, what can you do to help?
Reducing the pay gap is only one part, more needs to be done to support women and their financial wellbeing. Do you provide access to financial wellbeing benefits such as education tools or workplace saving schemes? If so, can you target the female population and encourage them to learn more about their finances?
How well do your employees understand their pension and the importance of saving for retirement? Pensions can be seen as a complex area and often information can seem confusing. Break it down and make it easy to understand through clear communications. Offer workshops where individuals can ask questions. We even have some clients who don’t use the word pension! Think of creative ways to communicate a traditional benefit and surprise your employees.
Women often pause their career for family
Based on data from the ONS, the gender pay gap is small or negative for employees in their 20s or 30s, but widens considerably for older age groups. Factors impacting women’s pay and employment become more apparent when women reach their 30s and 40s.
What are these factors? Women tend to spend more time out of work to raise a family, or take on caring responsibilities. As we’ve already mentioned, more women than men work part-time due to family reasons. In December 2020, 1.37 million women in the UK were ‘inactive’ in the workforce as they were looking after a family. What part can you play as an employer?
Flexibility around working hours and location is key to balancing work with caring responsibilities, of which women tend to have more of. Understand that employees may be juggling family commitments and work. Adopt a flexible approach to working patterns for all employees - not just parents. The pandemic has shown that many jobs can be done remotely and we hope to see more employers take a flexible approach when we return to the office.
Secondly, ensure all new parents know their rights when it comes to parental leave. Make sure it’s easy for employees to access your company policies. Are your parental policies attractive and competitive? This is an area market leaders have begun focusing on and we encourage employers to learn about the latest trends.
Lastly, to address the caring responsibilities faced by some, can you provide any additional support via your benefits package? Consider family benefits which allow parents, or carers, to access discounted support routes. Family care benefits typically have emergency support options, helping those with dependents find last minute care, and ultimately remain in work.
Higher earner, better perks
According to the ONS, a higher share of men than women work as managers, directors or senior officials. In 2019 only 15% of small and medium sized enterprises were led by women – this figure hasn’t changed much since 2015.
It’s not unusual to see grade-based benefit structures, although many employers want to move away from this approach. With more seniority comes better pay and ultimately a better package - enhanced pension contributions, family funded benefits, the list goes on. Suddenly, their total reward package becomes extremely generous compared to the rest of the employee population. What can you do to balance this?
Review your benefits scheme, is it based on grades, service or even salary? If so, consider removing these entitlement restrictions and where possible look towards a flat approach. These types of schemes can be complex and difficult to simplify. When changing such schemes, often it’s difficult to change benefit entitlements for existing employees. However, you can focus on ensuring the scheme for new joiners is modernised and equal. This can be a ‘quick win’ approach.
For the most flexible way to approach modernising your scheme consider an allowance model. You can provide employees with an equal pot of money to select the benefits most relevant to them and their lifestyle. This removes the need for employers to choose the benefits they think their employees want, and gives employees the power to design their own package.