Craig Rimmer, Policy Lead, Master Trusts, describes some of the efforts the PLSA is making to promote diversity and engage with the under-pensioned.
At the PLSA, our mission is to help everyone achieve a better income in retirement, and it is a statement that has been very much part of our DNA since our inception. We were instrumental in creating the tax treatment that underpins the pensions system in 1921 and we are arguing for 12% minimum contributions for automatic enrolment today.
Helping everyone means doing so with equality in mind. Pensions were initially designed around a post-war social norm of a husband and wife and 2.4 children, where the husband goes out to work and the wife takes on all the caring responsibilities. There has been some progress in reverse engineering pensions to fit the more diverse nature of households and families that we have today but there is still much to do.
NOW: Pensions recently reported that women’s pension wealth is calculated to be £51,100 by their 60’s compared to £156,500 for men, and there are other groups that are under-pensioned.
We have been working with the CII on its Insuring Women’s Future project, looking at life moments that contribute to the pensions gender gap – this work is due to culminate in a report in November. As well as looking at broader societal issues around shared parental leave, co-habiting and studying for STEM subjects, there is a spotlight on the pensions system and how it is designed.
Engaging with the LGBTQ+ community is also part of an ongoing challenge of improving retirement outcomes. The Aegon report, LGBT: Retirement Preparedness amid Social Progress (2017), found that LGBT retirement readiness in the UK was less than heterosexual retirement readiness, with an index score of 5.8 out of 10 compared to 6.2 out of 10. As these figures were part of a broader international study, it will need more granular research to understand why this is so in the UK and how we change this. The PSLA is involved with the #50for50 initiative, with our CEO Julian Mund pledging support for LGBTQ+ diversity, as the first step in ensuring that the pensions industry can better reflect the needs of its diverse membership. Hopefully in the long term this will tackle the LGBTQ+ savings gap.
The Pensions Policy Institute’s paper on the under-pensioned (2016) specified the five groups of people that fell into this category: women, ethnic minorities, disabled people, carers and the self-employed. The PLSA is working with the DWP and others in trying to find ways to get the self-employed to save more, and our work with the CII on the pensions gender gap is also looking at solutions for carers. The report stated that changes to the State Pension and automatic enrolment may address some of the imbalance for some of the under-pensioned, but again more research is needed to see the effects of these policies. The Office of Disability Issues encourages more inclusive communications, and this may be one of the levers that we should be using for all the under-pensioned groups to have more effective engagement.
We have consistently called for more diversity at board and trustee levels, because we believe diverse thought creates good decision-making. To have a truly diverse board, consideration should be given to protected characteristics and having a spectrum of ages. The PLSA has also signed up to the Diversity Project, promoting all forms of diversity including Neurodiversity, and the Women in Finance Charter. Diversity is one of the major pensions challenges that we need to fix, to help everyone achieve a better retirement.