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Saturday 2nd March 2024

Financial gender inequality: the gaps that still exist

financial gender gap

In our latest blog post, we discuss financial gender inequality, the gaps that still exist and what you can do to close them.

Women are still paid less than men, with the average gender pay gap for all workers, both full- and part-timers, was 15.4% in 2021, according to the Office for National Statistics.

Women hold more ISAs than men, but they’re more likely to have a cash ISA, while men are more likely have a stocks and shares ISA.

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On average, men have £2,991 more in their ISAs than women. This gender ISA gap has doubled in a decade, data from investment platform Hargreaves Lansdown shows.

Plus, some 300,000 more women have missed out on a workplace pension in the past year due to Covid-19 pandemic, research from NOW: Pensions shows.

A gender pension gap appears when women are between ages 25 and 34 – around the time those who become mothers typically have their first child (age 29), data published this week by interactive investor suggests.

Becky O’Connor, interactive investor head of pensions and savings, describes this as a ‘mothers pension gap’.

She says: “We need to scrap hackneyed assumptions that women are fundamentally more risk averse and stop babying women, implying that they need more help in understanding investment.

“It is true that there is a gender pension gap and an investment gap, but the reasons are less to do with fundamental differences between men and women and more to do with investing not featuring on women’s radar.

“These reasons may be social, cultural or economic. They might be a result of investment marketing historically being aimed at men and therefore women not seeing it as something for them. But it’s not because of capability or even necessarily approach.”

Difficult choices

Women are still overlooked by the finance sector. The gender pay gap, the pension and investing gap, and lack of access to financial services for women more broadly – are all factors that prove this problem.

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown comments: “Being a woman comes at a heavy financial cost. Not only are you paid less throughout your career you may also have to take time out of work to look after children, grandchildren and elderly relatives.

“Returning to work often means part-time work, reduced career opportunities and expensive childcare. Then when you finally get to a point where you might be able to start making a serious contribution to your long-term financial resilience menopause strikes and this can have an enormous impact on women’s ability to keep working.

“These circumstances mean women are not only paid less they also enter retirement severely disadvantaged with much lower pensions than men. While auto-enrolment has brought more women into pensions there is much more that needs to be done.

“Changes to auto-enrolment will make a difference but can’t solve the gender pension gap by itself. The pandemic has shown home-working can work but more flexible arrangements like condensed hours and flexi-time could also be considered more. This would help everyone from the working mother to the person looking after their elderly parents.”

Women in finance

The financial services industry needs to do more to break “boys club” mentality and allow more female role models to promote equality, says Tosin James-Odukoya, head of inclusion, diversity and talent acquisition at Quilter.

She says: “It’s no secret that the financial services industry needs to recruit more women and from more diverse backgrounds.

“There are so many interesting roles within the sector but many of them are still dominated by men and this needs to change.

“Companies across the industry must encourage more women into leadership roles as this is critical to addressing the gender pay gap and helping to produce female role models, which are crucial to attracting more female talent.

“The sector has changed a lot in recent years, helping to break down misperceptions that it’s a ‘boys’ club’ or one where women need to work much harder to succeed.”

If you work at a company of over 250 employers, you can find out the pay gap between male and female employees where you work here.

Photo by Mapbox on Unsplash

Dana Raer

Reporter

Dana is a former reporter at Mouthy Money, having previously worked for Times Money Mentor and the BBC.

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