One of the many ways the Covid-19 pandemic has impacted the workforce is the rise in the number of people working from home. More and more businesses are opening up to the idea of flexible or part-time working by employees.
Flexible working offers a multitude of benefits, including the ability to juggle childcare or looking after elderly relatives, as well as the opportunity to create a better work / life balance that works for each individual’s circumstances and health requirements. However, as PSG Wealth Management MD, Paul Gilsenan, advises, it can have less positive impacts, particularly when it comes to pensions.
According to a recent House of Commons briefing on ‘women and the economy’, almost 50% of people who worked during the pandemic did so from home and there has been almost an equal proportion of men and women working from home during the pandemic. Within the briefing, The Fawcett Society recommended: “Post-pandemic, we need to move to a new normal for flexible working which allows workers to adopt a hybrid model of home and workplace flexibility as well as flexing their working hours.”
While flexibility undoubtedly has its positives, particularly during a pandemic, it is not without its challenges. Flexible or part-time workers have traditionally been overwhelmingly female and educational charity The Female Lead talks about the ‘flexibility penalty’ – this is the price both full and part-time working women pay for having a degree of freedom in their work schedule.
Perhaps unsurprisingly, any reduction in hours is likely to have a significant impact on earnings and longer term wealth. To put it into perspective, research shows two years of maternity leave will reduce the average woman’s pension by £25,500, while a five-year career break at age 25 could mean the pension wealth at retirement could take a significant 33% hit.
While there are initiatives in place to even the playing field between men and women taking time off, including shared paternity leave in a child’s first year, the fact that only 2% of eligible couples have taken it up shows there’s still some way to go.
However, change is coming – one of the unexpected plus sides to more people working from home is that the stigma around such arrangements has lessened. No longer is home working seen by some as an unofficial sick day. Instead, people have embraced the opportunity to work from their sofa, kitchen table, even their beds – and found to their delight that productivity has not dipped. Flexibility can work.
The implications are far-reaching: if people no longer need to be in an office, the job market could be opened up to positions across the UK, instead of within a commuting belt. This increases the opportunities for promotions and could prove a plus for employees and employers alike.
While flexibility has its benefits, and is becoming more widely accepted, we need to be conscious of the longer-term impacts to make it a success post-pandemic. Working with a personal wealth manager can guide you on the options available to make the most of allowances and maximise your savings.