The conversation started off by reflecting on the pressing issue of gender inequity in wealth accumulation, highlighting the considerable disadvantages in building wealth that women face throughout their careers. Key insights from the WTW Wealth Equity Index reveal that globally, women on average accumulate only 74% of the wealth men have by retirement. The disparity is even more pronounced for women in senior positions. Several factors were discussed as contributing to this gap, including delayed career progression, the gender pay gap, family responsibilities, and differences in financial literacy. Accrued retirement benefits, which are a significant component of wealth, are particularly affected by these inequities.
The panel moved on to discuss the pay transparency regulations which are gaining traction globally. There are some common features for these types of regulations, including employees’ right to information about pay policies, pay range and average; requirement to calculate (and disclose) the pay gap on employee group basis and take action to address gaps that are discovered. Uniquely, under the EU Pay Transparency Directive, “pay” also includes benefits and must be included in pay equity analyses.
The panel emphasized the complexity of including employee benefits (which can represent up to 30% of total compensation) in calculating and disclosing the pay gap. Differences in benefit design and utilization (e.g., in retirement plans, parental leave) and level-based eligibility, often exacerbate pay inequities between genders. For example, differences in retirement plan contributions and normal retirement ages as well as different levels of utilization of parental leave can lead to women receiving lower benefits and pay over time.
To address the disparities that are discovered, HR leaders were encouraged to take proactive steps throughout the employee work cycle, including ensuring hiring policies are gender-neutral and fair, and raising awareness among stakeholders, conducting thorough data analysis to identify gaps in pay, pension and benefits. Providing education on retirement and benefits for managers and employees was also stressed as vital for fostering greater transparency and closing the gender pay gap. Monitoring the implementation of changes and their impact will be key to achieving long-term equity.
There were questions from the audience on how companies can prepare for compliance with the EU Pay Transparency Directive, including collecting information on benefits and policies across all entities and employee groups to facilitate the pay gap calculation. While there is still a lot of uncertainty on the specifics of the calculation, it is clear that benefits will have to be included. And to the extent that they contribute to a gap that is greater than 5%, companies will have to either confirm that this is for an objective reason or take action to reduce the gap.
The panel highlighted the importance of having the right structures in place as a core foundation for achieving pay equity within organizations. Employers must establish a well-designed job architecture and levelling framework that clearly identifies employees doing comparable work, using objective and gender-neutral criteria. Organizations should also consider whether these frameworks are aligned with pay ranges to ensure fairness. While pay differences based on objective factors, such as performance and location, are acceptable, these parameters must be clearly defined as part of the organization’s overall rewards approach. The panel stressed that any unexplainable pay differences should be avoided to prevent inequity.
A consistent and fair pay process is essential, and companies need to follow this process for all pay decisions, whether for current employees, new hires, promotions, or pay reviews. Ensuring these decisions are based on clearly defined criteria minimizes bias and reinforces pay equity across the organization.
Education and employee communication was identified as another key lever in delivering fair and transparent pay practices. Decision-makers—leaders and managers—must be fully informed about the company’s pay management philosophy and structure. Educating decision-makers on negotiation practices and eliminating bias in pay decisions is critical to fostering a culture of transparency and equity. Managers and leaders will also need to be trained on how to share information with employees about their pay, how this compares to their peers and the reasons for differences. Successfully navigating these discussions will be critical to maintaining a culture of transparency and equity.
This focus on structural and educational strategies underlines that achieving pay equity requires not just policy but also proactive implementation and ongoing oversight across all levels of an organization.
If you need help preparing for the EU Pay Transparency Directive, we are here to help.
