How wide is the gender pay gap in pensions firms?
At a glance:
- Investment and law firms dominate the ten firms with the largest median pay gaps
- Some firms have more women in the top quartile of pay but still large pay gaps
- Many say a larger proportion of women in senior posts pulls the figures down
Investment and law firms have the highest median gender hourly gender pay gaps out of nearly 100 pension-related firms reporting, James Phillips writes.
Since April last year, firms with more than 250 members of staff have been required to report on the gaps between pay for men and women, with the first reports due in earlier this month.
The data, which dates April 2017, is presented as mean and median hourly pay gaps - where the mean/median figure for women is taken from the mean/median figure for men - as well as bonus pay gaps. It also shows the difference between the proportion receiving bonuses.
Out of nearly 100 firms working with occupational pensions analysed by Professional Pensions, it was clear that some sectors for pension-related firms were more likely than others to report a large gap - at least on the median hourly pay figure.
Across the firms analysed, the median average of their mean hourly pay gaps was 23.3%, while the median of the median was 25.2%. For bonuses, this was 53.8% and 42% respectively.
The analysis - which does not include all possible firms and includes staff who do not work on pensions matters - also appears to show some serious lack of female representation at the most senior levels of companies at many firms, with big gaps between the sexes in the upper pay quartile.
The figures are not perfect - for example, they do not show if women are paid less for the same job - but they do show an endemic gap in remuneration.
Consultants
Of the 17 consultants included in the analysis, Aon ranked worst for both median and mean pay gaps, at 32% and 36.6% respectively. In monetary terms, the mean figure means women received 63.4 pence per hour for every pound their male counterparts earned.
In the company's report, Aon UK chief executive Julie Page said: "At Aon, we are committed to diversity and inclusion. Having a diverse workforce enables us to field best-in-class teams to serve our clients and create positive social impact for our communities. This in turn creates growth and development opportunities.
"Aon is fully aligned with the UK government's commitment to inclusion, diversity and fairness, which are embodied in our values. We welcome the new gender pay gap reporting requirements, both as a means of creating greater transparency, as well as reinforcing the importance of further action around gender equality."
Yet, a low median pay gap figure does not always mean a low mean pay gap figure or vice versa. For example, Conduent Business Process Solutions had the lowest median figure for consultants, at just 3.7%, yet its mean figure was 21.9%, the sixth lowest.
For bonuses, the position is somewhat confusing: while Conduent had the third smallest median bonus pay gap, at 28%, it paid 12.5 percentage points fewer women bonuses; meanwhile, Barnett Waddingham had the smallest median gap of 27.3%, and paid 3.2 percentage points more women bonuses.
Law firms
Law firms were the most likely type of firm to feature in the 10 with the largest median hourly gaps, with five firms appearing. Travers Smith and Linklaters recorded the largest gap on this measure, both with 39.1%, although the former had a mean gap of 14.8% while the latter's was 23.2%.
Travers Smith HR director Moira Slape comments: "Our current data is informed by the fact, that along with most other law firms, we have a high number of females in more junior roles who are paid lower salaries. This is the key factor which drives our median pay figure. However, we remain focused on pursuing our progressive diversity and inclusion agenda, which includes our commitment to improving our gender balance and related policies in the firm."
DLA Piper fared the best in this category for median pay gaps, with a figure of 12.2%, while it also recorded no median gap for bonuses paid.
Yet, some of these firms had more women in the highest paid jobs than men. For example, Travers Smith recorded more women than men across all but one of the quartiles - the upper middle quartile - and 57.3% of its best paid staff were women.
Of course, not all law firms reported high figures or fewer women in more senior jobs. Irwin Mitchell, which had a median pay gap figure of 16%, had a top quartile 68% comprised of women, and 73.1% in the next highest-paid tier.
Investment/finance
Investment and finance firms were the second most likely to feature in the 10 largest median pay gaps, with Wellington Management International coming out worst of all the firms included.
The asset manager, one of 29 assessed, divulged a 44.7% median pay gap, and a 30.7% mean pay gap; for bonuses, these were high - but not the highest of all firms - with a median gap of 84.6%.
Yet, this category had the worst figures for three of the four measures. With Wellington ranking worst for median gap, T.RowePrice did so for the mean bonus gap with a figure of 86.1% and Goldman Sachs International recorded a mean hourly pay gap of 55.5%, although its UK arm's gap was under a quarter of this at 16.1%.
The only figure the sector escaped unscathed for was median bonus gap, although Wellington ranked second on this measure with a gap of 84.6%.
A spokesperson for Wellington said: "We are confident that men and women at Wellington are paid equally for work of equal value. We also believe that diversity of talent and thought are central to delivering high-quality service and investment outcomes for our clients.
"As a result, we remain steadfastly committed to achieving greater levels of diversity and gender balance throughout our organisation."
AJ Bell fared the best in this category, revealing just an 8.4% median pay gap; yet it ranked in the half of all firms with the largest mean gaps, with a figure of 31%, the same as UBS.
Providers/Schemes
Just one pension scheme and one pooled arrangement were required to report - the Universities Superannuation Scheme and the Local Pensions Partnership - but when this category was broadened to include providers of occupational pensions and insurance contracts, the group grew to 23 firms.
Yet, many of these firms also provided other offerings, such as consultancy or investment services, making it harder to compare. For example, investment firms SEI and BlackRock were included because they run master trusts, and, while Aegon is a provider, its figures include those of its investment arm Kames Capital.
Nevertheless, Just Group fared worst, with a median pay gap of 37.8% and a median gap of 45.8%. On bonuses, the median gap was 50%, and the mean gap was 58.5%.
Its group communications director Stephen Lowe said: "These reporting regulations have been extremely useful in shining a light on this important issue that we, and the wider financial services industry, need to work hard to solve.
"While our gender pay gap is not an equal pay for equal roles issue, it does reflect a lack of females in senior roles within our organisation and the subsequent imbalance is reflected in the pay gap. And although there's no bias in our recruitment or promotion process it's clear we still have more to do to close the gap.
"It's something we are focused on changing. We are now exploring whether we need to change anything to encourage a greater number of female applicants at both the recruitment and promotion stages. And at the end of February we signed up to the Women in Finance Charter in which we have committed to increasing female representation at senior levels in the organisation."
USS and LPP ranked at opposite ends of the table for median pay gaps. USS had a figure of 35.2% on this measure, while LPP had one of 13.1%. Interestingly, the latter of those also had the largest median bonus pay gap - 93% - of all firms included in the analysis.
A spokesperson for USS said: "As with many financial services organisations and companies, USS has a greater proportion of men than women in senior roles, which drives a gender pay gap in the hourly rate of pay and this also means that we have fewer women in roles where the scale of the bonus potential is greater. Ensuring greater workplace diversity is an issue of great importance to USS - we are an organisation that is committed to equal opportunities for both men and women - as well as being an industry-wide challenge."
Public bodies
Just six public bodies were included in the analysis, the difference between their median pay gaps was significant. While the Bank of England (BoE) had the largest median gap of 24.2%, the Department for Work and Pensions (DWP) said it had no median gap whatsoever. In fact, the DWP ranked best for all but one of the measures, with a mean gap of 5.3% and a median bonus gap of 0%.
The Pensions Regulator had a median gap of 10.8% and a mean gap of 11.5%, and a median bonus gap of 12.1% and a mean gap of 10%. Conversely, the Pension Protection Fund had a median hourly gap of 20.4% and a mean gap of 25%, while its mean bonus gap was the highest of all, at 64.3%; its median bonus gap was 24.1%.
In the central bank's report, BoE governor Mark Carney said: "We're confident that men and women are paid equally for doing the same job at the bank; however, the greater proportion of men than women in senior roles creates a gender pay gap.
"We are working hard to address this imbalance through inclusive and diverse recruitment, including diverse shortlists and interview panels, offering flexible working, providing continual unconscious bias training, and fostering an inclusive culture. Addressing the disparity in gender representation at senior levels will take time, but it will help close the current gender pay gap at the bank."
Generally, these gaps are perhaps not surprising, as it is well-known that women are fairly unrepresented in the most senior positions across the financial services industry, and many others. Yet, the size of the gaps is something to think about, especially in sectors where female representation at the top is vastly better than other areas.
Closing the gap is not as simple as equalising pay, however. Much of the gap is blamed on women being in less senior positions.
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