Historically, women have a smaller amount of retirement savings compared to men
Plan sponsors have been implementing plan design changes and reviewing the benefits that they were offering in order to cater to a more equitable access to benefits, an article by Plansponsor said.
Given that women had historically a smaller amount of retirement savings compared to men because of their lower wages and their higher rate of quitting the workforce to care for their households, these plan sponsors were eyeing the improvement of equitable benefits access through adjusted compensation, mental health benefits, targeted communications, and affordable medical care.
An article by Canada Life discussed that in 2020, women had a retirement income that was 18% less than what men received. This was considered to be the Gender Pension Gap (GPG) which caused women to have a higher likelihood of living in poverty when they come into their retirement. Ontario's Pay Equity Office further showed that the GPG was around 15% in 1976, meaning that it still has not narrowed in 44 years.
Bridging the gender savings gap
In order to address this gap, plan sponsors have made improvements to their offers. Thea Ammon, senior benefits administrator at OneAZ Credit Union said that the firm had made adjustments to all wages to salary midpoints in order to drive equitable access to retirement and other benefits.
The plan sponsor also utilized an automatic feature when it comes to the design of their plans which included auto-enrollment and auto-escalation. It also had a qualified default investment alternative funds, shortened vesting, and adjusting the formula for employer match in order to have more equity across genders.
It also placed its focus on tying together health and wellness benefits in order to drive retirement plan participation and urge employees to contribute more for their retirement.
Salas O’Brien had added paid parental leaves for both men and women as well as mental health support and access to Headspace, a stress management platform.
ASM Research added an education strategist from Principal Asset Manager, a recordkeeper, which revealed that their women participants had lesser savings for their retirement compared to men.
Tammy Lassiter, senior retirement plan administrator at ASM Research, said that they are considering the formation of affinity groups of women and holding education sessions to help them become much more involved in their money and finances.
Why equitable access to benefits is important
Plan sponsors said that equitable access to benefits will have good results for businesses. Mark Smrecek, financial well-being market leader at WTW, said that workplaces that are diverse and have equal access to benefits can improve the long-term viability of businesses.
“This has been a key issue over the past several years, where making sure that organizations are not only equipped to do exactly what they’re intended, but to be best in market and the ability to attract and retain women in the workforce, men in the workforce, and all sorts of other affected communities in this space is absolutely critical from a talent perspective,” said Smrecek.
Lucas Hellmer, director of compensation and benefits at Salas O’Brien, said that employees who are financially stressed are less productive and have the tendency to be tenured for a shorter time.
“Work bleeding into your personal life can also have some negative consequences as well, [because] those people may not be successful with your organization and may ultimately leave [because of] something that may be preventable,” explained Hellmer.
“It’s all about retention: It’s not always about profit and loss. It’s [also] doing the right thing for team members.”