In the US, Senate Bill Targets Women’s Retirement Savings Inequities in the gender gap by amending ERISA. There, as elsewhere, the financial challenges that disproportionately affect women which a recent report in the UK identified as a massive 40.3% gap in pension savings between women and men — that's an average difference in pension income by gender of about £7,500 a year.2

The proposed US legislation would expand eligibility for employer-sponsored retirement plans to more part-time workers—most of whom are women, according to the bill’s sponsors. It also would expand existing spousal protections to prevent one spouse from undermining a couple’s retirement resources without the other’s knowledge and consent.

According to a draft of the bill, the median income for women 65 and older is 83% of the median income for men in the same age range because women’s retirement preparedness often lags significantly behind that of men. It also said that, among people ages 75 and older, 13.2% of women live in poverty, compared with 8.8% of men. And women make up two-thirds of low-wage workers—who are less likely to participate in a retirement plan—despite accounting for less than half of the entire workforce.

The bill also cited statistics showing that women working year-round full-time lose on average more than $400,000 over a 40-year career, which would require women to work almost a decade longer than men to make up the difference. And the gap is even wider for Black and Latina women at more than $960,400 and close to $1.2 million, respectively.

1. The gender pension gap begins with the gender pay gap

Because the amount people save for a pension is usually a percentage of their salary, the 15.5% gender pay gap could immediately mean that, on average, women have less salary to put into their pension — and that’s before aspects like career breaks, caring responsibilities and part-time working are even brought into the equation. 

Plus, the lower salary means that it takes women who started university after 2006/2007 an average of five years longer to pay back student debts. 3 This may mean that women often start saving for their pension later as their salary is going into paying off their student debts for a longer period, whereas men with higher salaries may be able to pay their loans off sooner — leaving them with more salary to add to their pension. So until we see more progress with the pay gap, the pension gap will remain a step behind.

It sounds obvious when you see it in black and white doesn’t it? But what’s the solution then?

The people behind the US bill, Murray and Underwood, have said the bill was needed even more now than before because the economic difficulties that came with the COVID-19 pandemic affected women, particularly women of colour, more than they did men. This is due to their overrepresentation in industries that the pandemic severely affected.

“COVID-19 has upended the finances of families across the country and led to severe job loss, especially in sectors [such as] child care that disproportionately employ women,” Murray said in a statement. “Even before this pandemic, women in America typically had less money saved for retirement, in part because they were paid less than their male counterparts for the same work throughout their careers.”

The other key factor of course, is divorce which further adds to the gap

For example, the average pension pot for a married man is £53,000 compared to £10,000 for married women.

“When you get divorced, your circumstances change drastically,” explains Picker from Aviva. “You’re under more financial pressure, and saving for your pension seems less important.”

Although pensions may not be top of agenda when discussing divorce proceedings, the pot can be as valuable as a house. That's why it's so important that pensions are split fairly. Enter the Pension Sharing Order. “This order means that if you’ve been married for 40 years and raised your two children, the court will entitle you to a percentage of your other half’s pension to make up for the disadvantage,” says Picker. 

The bill proposes to:

• Extend existing spousal protections for defined benefit (DB) plans to include defined contribution (DC) plans to prevent a spouse from making decisions that might undermine retirement resources without the other’s consent.

• Reduce the minimum participation standards for part-time workers to be eligible for a retirement plan to two years from three.

• Increase access to information about retirement and savings tools by providing grants for community-based organizations to provide information and financial tools to women.

• Provide grants for community-based organizations that help low-income women and survivors of domestic abuse obtain qualified domestic relations orders (QDROs), which allow for the division of retirement benefits and ensure they receive the retirement benefits they are entitled to after a divorce or separation.

“Inequities, like investments, compound over time,” said Murray, “which is why it is so critical we take action now to address how this pandemic and other challenges are undermining women’s financial futures.”