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Closing The Gender Pensions Gap : are we tackling it the right way?

I was invited yesterday to attend an event hosted by Now:Pensions titled ‘Closing the gender pensions gap’. We hear so much in the media about all the ‘gaps’ – there’s the gender pay gap, the wealth gap and probably a fair few more gaps too. But the pension gap is close to my heart as I absolutely know that I am the poster girl for this, especially as the focus of the event was on the role that flexible working can play in closing the gap.

The event ended with a panel nodding their heads and expressing positive sentiments that they believe the gender pay gap is moving towards narrowing; once we see the gender pay gap close, the expectation is that the pensions gap will follow in time.

But I found myself shaking my head a few times throughout the day. I know that I certainly felt at times that they didn’t have their finger on the pulse of people like me.

When I had children (we’ll call this ‘Life event 1’), I took time out on the workforce. I was out for a number of years and during that time I didn’t pay in to my pension. That was the beginning of my pension starting to pale in comparison to that of my husband. 

My decision not to return to work in the early days was a function of a lack of flexibility.

I couldn’t return to my old job in a part-time capacity; it just wasn’t the norm in the corporate finance world then. I knew that I’d end up doing a full week’s work on deals but being paid for my contracted days. Plus, I didn’t want to commute to London, and this was the only place I could continue in my specialist role. This was 2011 and I think maybe I could now as flexible working has evolved significantly, but regardless, I placed a higher value on caring for my children than I did on my career progression.

My career ambition for my chosen path disappeared almost overnight; slightly shocking as I had previously been so driven and worked bloody hard to qualify. 

So I ‘picked’ the life of ‘full time stay at home mum’

When I decided to go back to work, it was to something completely new as my old career meant sacrifices I wasn’t prepared to accept. I acknowledge that the cost and flexibility of childcare was certainly a point for consideration. I was fortunate to get a Bursar position at a local prep school where my children came with me as part of my package, so it ended up not being relevant for me. However, mine is a hugely unique situation and not representative of most women going back to work. 

With a full-time nursery place costing around £1,000, if you have a couple of children under school age, unless you are earning a salary over £40,000, you’re heading off to work full time for very little financial gain. So it’s easy to see why people feel they can’t go back to work when faced with this prohibitive cost.

Ultimately, full time work wasn’t for me with young children, as I wanted to see my children more. I missed them and begrudged not having the freedom to enjoy them when I wanted to. My return to full time work lasted less than 6 months. 

Men and women are fundamentally different in this regard. My husband, whilst he misses our girls when he’s at work and loves to get home to see them before bedtime, would never ‘sacrifice’ his career because of a paternal desire to be around his children more on a longer term basis. I use the word sacrifice because I absolutely know that he still holds the outdated belief (we had our children before shared parental leave came in) that if men are seen to be putting family ahead of work, they will not succeed to the highest levels. 

Is there an element of the cultural norm at play here whereby men have traditionally been the breadwinners? Someone in the family has to work to put food on the table and a roof over our heads after all. Maybe. But it’s more than that as this norm is increasingly challenged, especially since the arrival of shared parental leave. I think as women, we do feel a tremendous pull when we are separated from our children when they are young. You only need to talk to mothers about to return to work to hear the words of anguish they feel. 

This is a biological thing! I know there are exceptions on both sides, but by nature, as women we are the nurturers. We look after children, we look after the elderly. This isn’t about who earns more and who should ‘give up their job’, it’s about something much deeper. 

So in response to the man today (a man who can’t possibly understand how a woman feels about leaving her child) who boldly stated that ‘the solution to the gender pensions gap is to subsidise childcare so that we can get women back to work easily’, I say no.

I had no childcare costs. I also had a pay rise offered to me when I handed in my resignation. My feelings as a mother, and my need for the flexibility to see my children grow up in a way which worked for me, were stronger than any financial incentive to stay in any position which required presenteeism and was inflexible. 

Now I know that as a family we were in a position where I could make that choice. There are thousands of families out there where the parents have to return to work for financial reasons. Would subsidised childcare help these people? Of course it would.

But this brings me in a roundabout way to my next point. 

Life event 2 for me was making the move in to self-employment. 

When I said earlier that my career ambition for my chosen path died overnight, my career ambition as a whole was still burning away. When you’ve been to university, studied for a post graduate qualification (in my case as a Chartered Accountant) and spent thousands of hours mastering valuable skills around communication, leadership, tenacity, resilience, and the specific skills relevant to your chosen career, making baby food and watching endless episodes of Peppa Pig can leave you feeling a bit ‘Is this it?’

In fact, these skills gave me the very foundation on which to set up what is now a successful business. 

Self-employment gave me back a sense of purpose, enabled me to channel all the energy, passion and experience I had into something I really believed in, whilst also allowing me the total freedom to work on my terms. Doing something I absolutely love and reaping all the rewards is the icing on the cake! 

I spoke at an event on Sunday and when I sent my husband the photos of the beautiful room at The Ned where the event was held, he told me how proud he was of how far I have come ‘from the day you started all of this on the sofa’. 

The internet is a truly wonderful thing. I have built a successful business from the comfort of my own home, being available for everything I want and need to do with our children. 

It is incredible how many successful women I know, just like me, who have traded a return to their corporate careers for building their own business on their terms. I’m not talking about people selling Avon at parties or jewellery online, working for larger companies and being paid commission. These are women who were at senior levels in corporate organisations who have set up their own businesses and chosen the freedom that self-employment affords them. Every day I connect with more and more women just like me. 

I want to champion all these women because we have faced the hurdles and thrown ourselves at them. It’s not easy choosing this route. But what is the alternative?

Digitalisation, the internet and enhanced connectivity have all made choosing a life of self-employment easier. For many of these women, what they do now simply wouldn’t have been possible even 10 years ago. We are living in a different world and the data only serves to show that more and more people are choosing the freelance/gig economy/self-employment/entrepreneurship route.

It’s available to everyone of course, but in the context of the women returning to work, it has facilitated them being able to generate an income again when previously they would have been faced with the binary options of return to employment or non-earning stay at home mum during the early years of raising a family. 

It is possible to have the flexibility we crave, raise our families in a way that works for us, and importantly, to be rewarded again financially. (There is something awfully depressing about going from being a successful businesswoman with an independent income to not contributing to the family income – but that’s a topic for another time).

Self-employment has huge benefits in many ways. When it comes to pensions however, we are definitely second class citizens compared to the employed:

• We aren’t auto-enrolled into a pension scheme so we have to make a proactive decision to either continue paying in to an old scheme if allowed, or figure out how and where to open up a private pension. For so many people I speak to, pensions are a long way down their list when they are growing a new business and starting out on their own. Then, if and when they do contemplate the task, they just don’t know where to begin with this; too much jargon that they don’t understand, too much choice, not understanding fees, not feeling confident to approach a financial advisor for support. The list goes on.
• When we do pay in a pension scheme, we don’t benefit from any employer contributions. Yes we get tax relief but the real benefit from employer schemes often comes in the often generous matched, or higher, contributions from an employer. Free money. 

It’s easy to see why so few self-employed people I speak with are paying in to a pension. Frustrating but true. 

What can the government be doing?

We’ll be hearing a lot of election promises in the coming weeks. Indeed, the chair of the event yesterday closed with hope that we see on the manifestos both support for heavily subsidised childcare and a lowering of the band for eligibility for contributions to a workplace pension to £0. 

But I would like to add to that. Don’t let’s forget the important, and growing, population of self-employed. I would love to see Government top up contributions for the self employed on the campaign manifestos for the upcoming election.

There is absolutely no way I can start to bridge the gap whilst I am disadvantaged in this way compared to my husband. 

There was talk yesterday of a family carer top up being brought in for employees. This is another example of where policy could potentially facilitate a growing divide between the employed and the self-employed. I’m not against the policy at all; I think it is a great initiative and much needed. But  in the context of the gender pensions gap, let’s also explore ways we can encourage the self-employed women out there to continue to be building a pension pot whilst they are caring for either children or their elderly relatives. I don’t know the answer but would love to see the policy makers considering this as a real necessity.

If childcare subsidisation is a topic for debate, then let’s also consider how that can play in to the self-employed. At the moment, childcare costs are not a deductible business expense. Just imagine how many more women would be able to set up businesses or really expand their businesses, if this was a possibility. 

Conclusion

If we truly want to close the gender pension gap, the conversation needs to be really broad:

• Often families make the decision around whether the mother will return to work based on the income she would bring in net of childcare costs. Childcare costs aren’t solely a women’s responsibility; they should be considered a shared responsibility. Changing the way couples view this major decision is essential. 
• Following on from the above, consideration of the wider implication of returning to work is needed, not just the financial return. Viewing a return to work as an investment in your future career. 
• It’s crucial that employers take more responsibility to educate their employees to help them understand the value of continuing their pension contributions even when faced with major life events – especially time out for childcare. As an influencer in this space, I absolutely know that the message resonates when people hear it, so people need to hear more from their employers. 
• Greater flexibility by employers can only enhance the ability to get women back to work, if they chose this option, so I am fully supportive of initiatives in this space.
• How can we facilitate everyone being able to contribute meaningfully to their pension, and with ease, regardless of the type of employment they choose? This is something the Government needs to address urgently in my opinion. 
• What support can we provide at a basic level around budgeting to enable people to have enough to survive whilst also continuing pension payments.
• Finally, my true passion is around getting people to take action in relation to personal finance issues. All the education in the world doesn’t help people who can accept the logic, but are blocked on an emotional, subconscious level from acting on it. I see it all the time and it is what has driven me to the further psycho-therapeutic training I am doing now to facilitate my coaching work. Large organisations need to accept that educating people doesn’t mean that they will take action. How can we facilitate more wide spread exploration of the psychology around money to underpin the educational literature? I’m a small voice in a very, very large ocean!

My own pension will never catch up relative to my husband. Life events 1 and 2 mean that gap can not close. However, I will continue to educate others in the hope that by the time my children are of an age where they are supporting themselves, this issue is well on the way to being fixed.