Pensions insight
Why women are worse off in retirement
Deborah Vickers, channel director at moneyguru.com, takes a look at how they came to this conclusion and what is causing the issue
T he gender pay gap is just one of the downfalls women face in the workplace, and it shows no sign of stopping anytime soon. But the gender investment gap is arguably just as pressing as the pay gap, as it means many women are far less prepared for their long-term financial future than their male counterparts. Not investing may actually be one of the riskiest things you can do, because just saving money won’t ever get you to meet your long-term saving goals. Research from Money Guru has uncovered that as a result of lack of investment women are retiring with 67% less money than men – £29,000 less in fact (https://bit.ly/2FRjuFg). Data from April 2018 shows that 52% of women in the UK have never invested in financial products. Only 28% of women feel comfortable investing some of their money compared to 45% of men and just 13% of women feel they have a good knowledge and understanding of investments. Studies are now showing that despite the issues and self-perception of low knowledge and confidence, women are actually better investors than men and have outperformed men for the past decade. Our research has uncovered that women are more risk adverse with 35% of women saying that they would not invest due to the chance of losing money, compared to just 18% of men who said the same. Studies show that women are less confident and knowledgeable about investing. Or at least they think they are. Plus, the gender pay gap means that many women may have less money to invest.
This isn’t helped by the fact that the new state pension deal leaves women £29,000 worse off than men over the course of a typical twenty-year retirement. Under the new system the average pension pay out for women is £125.98 per week, compared to £153.86 per week for men.
if it is leaving them worse off in later life. Aversion to risk is something that we need to address across the board and in particular when it comes to supporting women to be more confident when it comes to financial investments. Women have a more pessimistic financial outlook, too. In a survey held in 2017 looking at a six-month period between September 2016 and March 2017, a high proportion of women consistently viewed the performance of the UK economy, their own personal finances and their household finances as having worsened during that time period. This goes some way to explain the pessimistic outlook on their financial security over the next decade. As a result of lack of investment women tend to retire with two thirds the money of men. Our research has uncovered that on average women are two thirds, £29,000, worse off in retirement compared to their male counterparts. This is disconcerting, given that women are likely to live longer than men. A study by Which? found that the average payment to women is just 81.9% of the average payment to men. The disparity comes from different National Insurance contributions both genders have usually made throughout their working lives, with women still at a disadvantage for taking time out to care for their children and because the gender pay gap means they don’t have as much to invest. Fixing the gender pay gap isn’t going to be an overnight job. The best solution is yet to be implemented. However, closing the investment pay gap may be as simple as taking that first step and making a small but calculated investment. n
...on average women are two thirds,
When it comes to financial decision making, women are more likely to think about day to day priorities, with many money choices still being perceived as male or female. Women feel more responsible for food shopping and household items, for example, and men feel more responsible for things like choosing utility suppliers or buying high value items like TVs and cars. At Money Guru we have never seen a gender gap when it comes to applications for credit, which is great to see. Yet just a generation ago women were viewed as a riskier investment by banks and stores and often had to get their father or husband to sign for most loans. It shows real progress that just as many women as men are taking the lead when it comes to finding the right deals for them. However, the stats show that there is a still long way to go to empower women when it comes to their finances, especially £29,000, worse off in retirement compared to their male counterparts
45
Issue 46 | December 2018 / January 2019
| Professional in Payroll, Pensions and Reward |
Made with FlippingBook - Online magazine maker