‘Common error’ could leave thousands of women out of pocket in pensions – without realising

Introduction: The Discovery of the Error

Recent investigations have revealed a concerning issue affecting British women on maternity leave: errors in pension contributions by employers. Instead of continuing contributions based on full salary, employers are reducing them to match lower maternity pay, leading to significant financial losses. This issue underscores a systemic problem impacting women’s financial security and retirement savings.

The Scope and Potential Extent

The potential scale of this problem is alarming. Advocacy groups like Nugget Savings report that over 100 women out of 236 surveyed found discrepancies, suggesting widespread impact. Co-founder Katie Guild notes that this error could date back to 2012, potentially affecting millions. The financial loss isn’t just immediate; the compound interest over decades exacerbates the gender pension gap.

Personal Stories of Affected Women

Women have shared their experiences of losing substantial sums. One marketing professional lost £4,000, eventually repaid without apology. Chloe, an aviation industry employee, was underpaid by £717.22, highlighting the emotional and financial stress of chasing corrections. These stories illustrate the real-world impact of these errors on women’s lives.

Advocacy Groups and Their Findings

Nugget Savings has been instrumental in uncovering this issue, revealing that over half of surveyed women found discrepancies. Despite some repayments, many face resistance or lengthy correction processes. Harriet Morton-Liddle emphasizes the lack of clear guidelines, leading to contradictory advice and unaware employers, highlighting the need for better awareness and advocacy.

Facing Resistance: Women’s Struggles in Seeking Corrections

Many women encounter resistance when addressing underpayments. Employers often cite time limits or contend their contributions were correct. Sam, a mother of two, had to involve her union and calculate her own losses to secure a fair repayment. These challenges add to the burden on women already managing childcare and careers, showcasing the need for clearer policies and support.

Consequences on the Gender Pension Gap

The gender pension gap is worsened by these errors. Women’s average pension pots are 55% smaller than men’s, due to lower contributions from reduced working hours and caregiving roles. This issue perpetuates financial inequalities, as lost contributions miss out on decades of compound growth, underscoring the urgency of addressing both the gender pay and pension gaps.