In the UK, for most people, the ability to save for retirement is strongly linked to the ability to earn an income through work. At present, gender can play a large role in a person’s long-term employment prospects and hence their retirement prospect. This raises the question of what needs to be done to ensure “retirement equality”.
Biology and earnings power
From birth to young adulthood, people of both genders can now be fairly said to be on roughly equal terms. The situation may not be perfect and perhaps it never will be. Overall, however, a combination of education, social changes and the need for labour has allowed women to progress in the workplace.
Once children come along, however, the situation can change significantly. Firstly, it’s women who go through pregnancy. This in itself can be enough to hinder career progression. As pregnancy advances, it may become harder for women to participate in networking (formal and informal). This may see them lose out on opportunities.
The reality of shared parental leave
Parental leave can now, legally, be shared between men and women. In reality, however, practicality often dictates that women take most, if not all of it. To begin with, the mother is likely to need time to recover from the physical toll of pregnancy. After this, feeding becomes an issue.
Again, technically, there are ways around this. For example, parents can use formula and/or mothers can express breast milk. In reality, both of these options have their drawbacks. Not only do they create extra work, but they also require extra equipment. This needs to be cleaned (sterilized) and stored and for many parents, storage space is at a premium.
Overall, therefore, if both parents are on roughly equal wages, then it generally makes practical sense for the mother to use the parental leave. If the father is the higher earner, then the argument for the mother being the one to take time off work becomes even more compelling.
More children means more time off work
If parents want to have more than one child, then the same practicalities apply all over again. What’s more, if the mother took most of the parental leave the first time around, then the economic argument for her doing so again is likely to be even stronger. Quite simply the mother’s career and hence earnings is unlikely to have progressed as far as the father’s.
The realities of returning to work
In the real world, career progression often depends on a combination of skills (both hard and soft), time and networking. All of these can suffer when a person takes time off work to have a baby. The law allows a person to have a job kept open for them while they are on parental leave. It does not and cannot prevent the realities of playing catch-up after a long absence.
Similarly, while the returner is playing catch-up to get back where they were, other people are continuing with their career progression. This means that by the time the returner has caught up, their former peers have moved ahead.
Levelling the gender pension gap
Levelling the gender pay gap could potentially go a long way to addressing this issue. On its own, however, it is unlikely to be enough. This is because retirement savings depend on the length of time a person works as well as how much they earn.
Another option would be to top up the pensions savings of people on parental leave. This is already done, to a certain extent with the state pension. When parents receive child benefit, they also receive National Insurance credits that count towards the state pension. This scheme could be extended to include contributions to a workplace pension.