Listen: The Pandemic Widens Retirement Gap for Women

Listen: The Pandemic Widens Retirement Gap for Women
July 7, 2021 11 mins

Listen: The Pandemic Widens Retirement Gap for Women

Pandemic Widens Retirement Gap for Women Hero Image

From working on the front lines and extra childcare needs to losing jobs, women are bearing the brunt of COVID-19’s impact on the workforce.

Key Takeaways
  1. The COVID-19 pandemic has disproportionately affected women in the workforce, leading to negative impacts on their retirement plans.
  2. The challenges facing women in regard to retirement security include lower pay, less time in the workforce and the added demands of caregiving during the pandemic.
  3. Potential solutions discussed by industry experts include expanding social security and financial education to promote gender equality in retirement, as well as addressing pay gaps and promoting more women into leadership roles.

Christa Davies Chief Financial Officer at Aon
Elizabeth Shuler Secretary Treasurer of AFL-CIO
Mathilde Mesnard Deputy Director, Organisation for Economic Co-Operation and Development
Elizabeth McCaul Supervisory Board of the European Central Bank
Sandy Boss Global Head Investment Stewardship at BlackRock

Audio Transcript

From working on the front lines and extra childcare needs to losing jobs, women are bearing the brunt of COVID-19’s impact on the workforce. How will this affect their retirement?

In a roundtable event hosted by Aon, industry experts from the U.S. and EU came together to examine how the pandemic is changing women’s
retirement plans, and what options could help. Christa Davies, chief financial officer at Aon, kicked off the event.

Christa Davies
: In terms of retirement for women, less time in the workforce, lower pay, and greater longevity retirement security results in exacerbation of a systemic issue. Women will generally have less money to provide for a longer retirement than men. There’s emerging evidence that these negative effects for women result from the economy, disproportionately impacting jobs that women held more of, and partly by women responding disproportionately to the additional demands of caregiving, in areas such as school, daycare, and the social infrastructure which has ceased to exist during the pandemic.

In the U.S., facing retirement security risks already, women are even more vulnerable after COVID-19. Elizabeth Shuler is the secretary treasurer of the AFL-CIO, a federation of labor unions representing 13 million workers across the U.S. economy.

Elizabeth Shuler: Two thirds of all private sector workers have access to some form of retirement plan, not a defined benefit plan. But that’s only two thirds of the workforce has something. And how can the working families in America save, when even before the pandemic, a staggering 40% of Americans didn’t have $400 in the bank for emergency expenses? That is just absolutely insane.

And now, we’re at a point where, as Unions have actually shrunk in the US, there’s less people in Unions, we’re the only ones left that have defined benefit pension plans. So, only 15% of US workers have a pension plan that guarantees retirement income for life. So, the number of young people in this country, when you ask them, millennials, “What is a pension?” They don’t even know what it is, unless they grew up in a Union household.

A working woman making a minimum wage of $7.25 an hour cannot afford to save for retirement on her own. So, we’re hopeful that we can work together with employers, to encourage that they make more generous contributions to employees’ retirement savings, and encourage their workers, and educate their workers, of course to participate. And then, that social safety net, the social security in the United States also, it’s pretty weak, the social safety net. So, we need to expand social security to promote gender equality.

In Europe, this is a time to talk about pensions even more. Mathilde Mesnard is the deputy director at the Organisation for Economic Co-operation and Development.

Mathilde Mesnard: This issue of the pension gap I use a lot when I talk to young women. Of course, they don’t like to speak about pension, because it’s far from their concerns. It seems quite far away. But when you explain that, at the end of day, you will live much longer than your male colleagues retirement, and you’ll be poorer than them for longer, it’s quite striking.

And that’s where you need to have really a holistic policy to fix this pension gap. You need to fix it at home, like having a more equal sharing of care responsibilities at home. We need to fix it at the office, having less pay gap having more promotion for women, et cetera, and that’s the whole thing. And then you can fix some aspects of the pension system itself. Some aspect of education, also financial education, so that women do pay more attention, do take more risk in saving for retirement, et cetera.

So, there are a whole list of things that could be done to try to fix this pension gap. And what I very often say, “Mind the gap, the pension gap.” Because women tend to make decisions when they have kids, or to stay away from the working, from work for two or three years, and they don’t realize how much they will pay for that while they are old. So, it’s a super powerful message, and that’s an area where public policy needs to be super proactive, and holistic.

One element that could help the squeeze on women’s retirement is a focus on consistent employment for women. Elizabeth McCaul is a member of the Supervisory Board of the European Central Bank.

Elizabeth McCaul: We’re in the pandemic, we have this effect on women that is very well documented, they are leaving the workforce in droves. And there are things that we need to do, we need to be interventionist about that, in order to have a different outcome. And so, I would focus on three things.

First is, what’s happening as a result of women leaving the workforce is, they are experiencing a gap in their skills development. We need to be interventionist with addressing that, as we go forward. The second is they are going to experience a gap in their wage earning. We’re going to be able to statistically see this, because they’ve left the workforce, there will be this widening gap that occurs. We have to be interventionist, to make sure that that does not become itself a pandemic.

And then third, I would focus on getting the women into the workforce. And there are two things there. The first is the funnel, how are we promoting the women? How are we moving them ahead? And it’s, make sure that we have policies in place that are focused on potential, promotion for potential, not promotion for perfection, because women don’t apply unless they think that they have every single thing that they need to have in the toolbox, in order to do the job on day one. It’s not true, you learn on the job, and you develop your skills on the job.

And then second, we really need to make it clear that part time is available. It’s not that it’s all the time, it’s a long life. It’s a long working life. Women often need, at some point in their life, in their caregiving capacities, the ability to work part time. So, willingness for part time there. How does that affect retirement? All of it does, because if they’re in the workforce, of course, then they’ll be eligible for, hopefully, the excellent pension programs, that need to be available.

Employer choices in the areas of talent and retirement could also help ease the pressure. Sandy Boss is the global head of investment stewardship at BlackRock, an asset manager for individuals and institutions.

Sandy Boss: There’s two routes here, I think, as an employer. So, one is what can we do to manage the talent lifecycle, such that women are getting into good positions, where they have both higher income, and they are therefore qualifying for higher contributions into retirement? So, I do think that, whether it’s attracting, retaining, developing women, being gender blind around the promotion process, being gender blind around compensation decisions, these are really, really important parts of ensuring that women don’t start from behind, in terms of that income differential.

But then if we think about our role as employers, there are further things we can do. The most important one is workforce employment provision of a retirement package. So, obviously, in the US, it’s sometimes optional. But, we know from data, that if there is a workforce pension, and it is provided to the broad majority of workforce, and it is well communicated, and you opt in automatically, it’s an auto enrollment, and they make it really easy for you to tick the box that says, “I will add an extra X amount per month in my voluntary contribution.” That’s incredibly important.

The next thing is asset allocation. So, it’s really important for us, if we are providing a workforce pension, to ensure that the options, the default options are actually long term beneficial. So, it’s known that, particularly people who don’t have a financial education, and statistically women who might be more conservative, may choose to opt into a lower risk profile than might well be appropriate, if you’re thinking about a 30, or 40 year time period for savings. So, making sure that the asset allocations are appropriate. We use a life path concept. I think many retirement providers have similar balanced funds, that balance toward higher risk return asset classes over time.

Thanks to all the participants of this roundtable discussion, originally part of Aon’s panel discussion: The Decline of Women’s Labour Market Participation during COVID-19: A Systemic Risk. Learn more at


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