Ms Savova founded PensionBee in 2014 after struggling to move her own pension away from her previous employer even though majority of her career was spent in the financial industry. Now, PensionBee has headed onto the London Stock Exchange and Ms Savova shared the critical issue of child-care responsibilities that could see women losing as much as £100,000 in their pensions.
“The gender pay gap translates into a much much bigger gender pension gap sometimes as high as 50 percent in some regions.
“Women have half the pension size that men have in later years because when you invest your earnings you earn returns and invest those returns so that compounding interest multiples over time.”
She continued: “[This means] that what could be a 10 percent gender pay gap in the early years of your career becomes a 50 percent gender pension gap because of the way the investing system works.
“When men and women enter the workforce, generally we are paid equally, however, over time there starts to exist a pay gap between men and women and usually its around the time that women start having children and taking time off work.”
Ms Savova commented that this gradual loss of wages is due to the amount of unpaid responsibilities that women take on when they have a child.
“As a woman you tend to get penalised when you’re having the baby and after you’re having the baby not only by your employer but also in the family because women take on most of the unpaid care work.”
And while it may be strange to think that having a child at the very start of a woman’s career is what could make her pension 50 percent less than that of her partner, it’s because all of these aspects compound over time.
“As you take time off work your earnings potential reduces, your partners earning potential increases because they continue to gain experience while you are taking time off to look after your children.”
Ms Savova continued: “And then by the time you return to work you still have child care responsibilities so actually throughout their lives women tend to work fewer paid hours than men and more unpaid hours than men.”
She added that while many are striving for equal pay, this may not be the correct intervention to help neutralise the pension difference between genders.
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“The only intervention that works is shared childcare responsibilities between men and women which translates into equal parental leave and also equal availability of reduced hours during those crucial years that a child is unable to look after themselves.
“Right now, maternal leave policies are substantially more generous than paternal leave policies, so there are economic incentives for women to be the primary caregiver.”
Solving this economic inequity will hopefully encourage a stronger caregiver role for men to take on.
“By definition men and women will work similar hours and get paid similarly and take on the same amount of unpaid care responsibilities – that’s the way to solve it.”
Ms Savova added that there are essentially three factors affecting women’s financial wellbeing overall:
“First of all, women are less likely to have a pension already because pensions are generally given to you in the workplace and women tend to take on more part-time work.
“These working patterns have created an unfair distribution of financial product access between the genders.
“As a result of that and fewer women historically having pensions, a lot of pension products have just been made for men.
“If you check the language that’s used in many pension products what you’ll find is a language that is really unappealing to women.
“The third aspect is that women should step up as well and decide that their finances are important.”
And while these changes all have to occur on a macroeconomic scale, there are small mindset shifts and societal changes that can be encouraged in the meantime.
“If men and women take equal responsibility, then women’s pensions will be substantially larger, on the order of £100,000 larger, and men wouldn’t lose out much. You would effectively see a normalisation of women’s wages relative to men.
“Our most recent data has shown that even though there’s a gender pay gap, women’s contributions into their pensions are growing at a faster rate.
“So, their contributions are still smaller because they are earning less however the growth rate in their contributions are greater than men’s contributions.”
Ms Savova added that her driving force behind PensionBee was making pensions accessible to everyone:
“By definition we’re an incredibly inclusive company as an entrepreneur and as a business owner you have a unique opportunity to do things differently and to build in the way that you want your company to be in the future.”
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