Today is Equal Pay Day, meaning for the rest of 2016, women are effectively no longer earning, says the Fawcett Society.
The charity that campaigns for gender equality and women’s rights says that despite the Equal Pay Act coming into force four years ago, women still earn less than men in Britain today.
The most recent stats from the Office for National Statistics’ (ONS’) Annual Survey of Hours and Earnings (ASHE) show that the pay gap for full-time male and female workers is 13.9%.
The Fawcett Society says this gender pay gap means that women effectively stop earning relative to men on a day in November. This day is referred to as Equal Pay Day and varies according to the actual pay gap each year – in 2016 Equal Pay Day is the 10 November (today). This is only one day later than last year. At the current rate of progress it will take over 60 years to close the gap for full time workers.
The charity says that, overall, women can expect to earn significantly less than men over their entire careers as a result of differences in caring responsibilities; clustering in low skilled and low paid work, the qualifications and skills women acquire; and outright discrimination.
“Women also save less for the long-term”
But financial experts also point out that lower earnings also translate into lower savings rates too.
Martin Palmer, head of corporate funds proposition, at Zurich UK says: “Pay inequality persists in 2016 and, unsurprisingly, it’s resulting in many women saving less for the long-term than their male counterparts. This situation is exacerbated by women being still most likely to take a career break to raise a family despite shared parental leave, having a further knock-on effect on the amount that they are able to save. In fact, two in five women aged 25 to 39, an estimated 2.56 million, have nothing saved into their pension. This compares to 30% of their male peers, and means they are risking financial hardship in the future.
“Key to overcoming this is for women to pay more into their pension while they are working full-time, and take advantage of the guidance and support available in the workplace, which potentially includes pension contribution from their employer, to ensure the best savings strategy is taken. Setting financial goals early on can help to mitigate any short-fall in pay and ensure women can achieve the retirement they want.”
Fiona Tait, pensions specialist at Royal London, says: “Crucially, so long as women earn less, they will most likely continue to save less for their retirement, particularly as workplace pension contributions are usually based on a percentage of salary. This results in a “double whammy” of lower employer contributions and an increased financial pressure to make their own pension contributions.
“The result is that we see women’s retirement income mirror their earned income with women finding that their pension pot also effectively runs out sooner than their male colleagues, so they are more likely to be dependent on just the state pension for the latter years of their lives.
"Royal London’s latest Pensions Through The Ages research reflects this, with nearly one in five women aged 35 to 44 saying that they believe that their financial situation in retirement will be unmanageable. Encouragingly, nearly half also said that they would seek advice in the future. Taking advice, and sooner rather than later, could make a real difference in retirement and encourage more women to make the most of their employers’ pension arrangements.”
Childcare costs could also be putting women’s pensions at risk.
What can you do about the gender pay gap?
Here are some ideas to encourage the gender pay gap to shrink.
- Have a conversation at work about pay and find out what your colleagues earn.
- Ask your employer whether they know about new regulations, which are due to come in to force next year, requiring organisations with over 250 employees to publish their gender pay gap figure and whether they are ready to implement this change.
- Write to your MP and ask them what they and their party are doing to close the gender pay gap.