With LGBT individuals facing a significant pay gap, how will retirement funds be affected?
Research as recent as 2022 has shown there is a significant LGBT pay gap. And with lower pay comes lower pension contributions, meaning less money for retirement.
But just how drastically will this pay gap affect retirement for LGBT individuals? And what is being done to support the LGBT community within the workforce?
The LGBT pay gap
In June 2022, the LGBT pay gap was reported to be 16%, which represents an average difference of £6,700 between LGBT workers and their cisgender heterosexual co-workers. A recent TUC report found that only 1 in 8 workplaces actually monitored this pay gap. So, evidence of pay discrimination towards LGBT workers may fall under the radar.
Cases in history
February is LGBT+ History Month, and a quick look at the timeline when it comes to anti-discrimination legislation in the workplace shows that protection for diverse workers has only been around for over 20 years.
The UK Employment Equality (Sexual Orientation) Regulation, making it illegal to discriminate against lesbians, gay and bi people in the workplace, became law in the UK in 2003. And in 2000 the UK Government lifted the ban on lesbians, gay men, and bi people serving in the armed forces, for example.
What’s being done
But while rights for the LGBT community may have come a long way, there is still much progress to be made. Tackling the wage gap is just one vital next step towards achieving equality.
The LGBT pay gap only grows throughout a person’s lifetime. And yet little has been done to change the disparity. In 2022, TUC called for government action to remedy this inequality, and to offer protection to LGBT workers and their rights. But so far, their calls have been met with silence…
How this affects retirement
There are three ways the LGBT pay gap can affect retirement savings:
- With less money coming in through wages, LGBT workers are not able to contribute as much money to their pension.
- Some workplace pension schemes match employee contributions with additional employer contributions. So if you decide to pay 5% of your salary into your workplace pension, your employer might also contribute 5% to match it. But if your 5% contribution is worth less than a better paid colleague, so is the 5% employer contribution.
- Some people decide to put a one-off salary bonus straight into their pension as it means they don't pay income tax on it. Since a bonus can be a percentage of pay, LGBT workers could be at a disadvantage here too.
Over the course of 30 to 40 years, LGBT staff members could be left with a much lower retirement fund than their non-LGBT co-workers.
How to help make change happen
If you’re LGBT, and feel you’re getting paid less than you should, there’s a few steps you can take. Raising awareness, campaigning and creating solidarity with your co-workers are all essential to making big changes. And, from a financial side, seeking professional advice from someone who understands the challenges you are facing can help to secure your pension and better manage your funds during this time of inequality.
You can also pursue legal action. This is discrimination and if you can prove this, you have a case to fight. The Citizens Advice Bureau has lots of advice on how to approach this.
Anyone can join or donate to campaigns against the LGBT pay gap and stand up for your LGBT co-workers rights in the workplace. Provide solidarity and make it count. But not just with words, with your actions.
Click here for more information on LGBT+ History Month
