[Skip to content]

Sign up for our daily newsletter
The Actuary The magazine of the Institute & Faculty of Actuaries

Gender pay gap continues to fuel pension inequality

Failure to close the gap between male and female pay is disproportionately excluding women from workplace pension auto-enrolment and driving income inequality in retirement.

The pay gap is a “monstrous injustice” ©iStock
The pay gap is a “monstrous injustice” ©iStock

That is according to Aegon's head of pensions, Kate Smith, who highlights how the auto-enrolment requirement of earning at least £10,000 a year from a single job is not being met by almost one-third of women.

This comes on the same day that a report from the Business Committee revealed that 78% of organisations in the UK are reporting gender pay gaps in favour of men, with the pay difference as much as 40% in some sectors.

“This discrepancy will continue to fuel pension inequality unless changed," Smith said. “Tackling the gender pay gap will kill two birds with one stone and fix the gender pension gap.”

The committee report also shows that 13% of employers pay men more than women by at least 30%, and that only half the current workforce are covered by present gender pay gap reporting requirements.

It also notes that organisations are excluding their highest paid employees from reporting, making “a nonsense of efforts to understand the scale of, and reasons behind” the gender pay gap.

In response, the MPs calls on the government to widen the net of organisations that publish pay gap data, ensuring the rules apply to smaller businesses with over 50 staff as well firms with more than 250 employees.

They also recommend that businesses be required to publish, alongside their figures, an explanation of any gender pay gaps, action plans for closing them, and progress reports every year.

Committee chair, Rachel Reeves, said the pay gaps were a “monstrous injustice”, and that they must be closed in the interests of fairness and promoting diversity at the highest levels of the business community.

“But also to improve the country's economic performance,” she continued. “A persistent gender pay gap shows that companies are failing to harness fully the talents of half the population.

“For example, why aren’t they offering flexible working at senior levels? They must look at why they have a pay gap, and then determine the right initiatives, policies and practices to close it.

“Chief executives should have stretching targets in their key performance indicators and be held to account for any failure to deliver.”

Sign up to our free newsletter here and receive a weekly roundup of news concerning the actuarial profession