Why International Women’s Day should matter for your finances

This International Women’s Day the theme is #BreaktheBias, with all of us being encouraged to think about how we call out gender stereotypes, discrimination and bias in our workplaces and communities.

It is also a good time to think about how this discrimination and bias has affected women’s finances and to put in place new strategies to close the gap between male and female wealth.

Gender bias affects our financial resilience throughout our lives, and being proactive in addressing it – whether within a couple, as a single person or as an employer - can help us to ensure that everyone’s finances are on a stronger footing going forward.

Your salary

Women in the UK earn less than their male counterparts – a discrepancy that affects their finances for their entire lives.

Analysis by the Financial Times in October1 suggests that in 2020 (the period for which the latest figures are available) women earned 87p for every pound that men earn, with the gap growing in industries include finance, insurance, education, technology and energy.

According to the Fawcett Society2, there are a variety of reasons why the gap exists, including differences in caring responsibilities between men and women, the fact that more women than men are in low-skilled and low paid roles, and outright discrimination.

Initiatives to improve the situation include gender pay gap reporting, which means that most businesses with more than 250 staff must report the gap between male and female pay3.

What you can do about it.

  • If you work for a company that is required to report its gender pay gap, you can check it here. The government gives suggestions here on ways to close it, including showing salary ranges to encourage negotiation and using skill-based tasks in recruitment.
  • If you are a woman in a company with a high gender pay gap, or applying for one, let this information be a tool to help you negotiate a higher salary. The government information suggests that women are less likely to negotiate on salary, but would receive better wages if they did.

Your pension

Recent figures from insurer Legal & General shows that the gap between the value of male and female pensions is large and widens greatly over time.

At the beginning of a woman’s career her pension is likely to be 17 per cent less than that of a man, but this increases to 56 per cent at retirement4.

This means that women retire with a far smaller income than men.

Women are more likely to choose to take their pension in cash, rather than leaving it invested to drawdown from, meaning it is subject to erosion by inflation

What you can do about it

  • Make sure you maximise pension contributions when you are young – these will grow as you get older thanks to the miracle of compounding.
  • As part of a couple, if the woman takes time off for caring responsibilities, ensure provision is made for her pension at this point so that her retirement savings are not thrown off track. A financial adviser can help to make arrangements for this.
  • Take legal advice to ensure that any divorce settlements take pensions into account.
  • Take detailed advice before you decide how to take your pension, so that you are not making decisions that could affect your retirement income over time.

Your investments

The gender investment gap is estimated to stand at £1.65 trillion5, with women much less likely to have an investment account than men and Youinvest confirms that women are just as likely to have a savings account, making a comparison that they save on average £180pm compared to men who on average save £306pm investments6.

That’s partly due to the gender pay gap, but also to a greater propensity to take risk, the research shows, with women’s ‘play it safe’ attitude sometimes leading to lower returns.

What you can do about it

  • Take financial advice to ensure you’re getting the right savings or investment accounts for you.
  • Ensure that, if you are a part of a couple, you have savings in both of your names, to take advantage of tax allowances.
  • Make a plan as a couple to cover pension contributions during maternity leave so that your pension is not affected.

With household bills rising, getting on top of your finances for both the short term and the long term is more important than ever. This International Women’s Day, there is plenty we can all do to ensure that women, as well as men, remain financially resilient in difficult times and are able to make plans for their retirement.

1 https://www.ft.com/content/239c95cc-d34f-43e9-a61e-faa7954277b6 
2 https://www.fawcettsociety.org.uk/close-gender-pay-gap 
3 https://www.gov.uk/government/collections/gender-pay-gap-reporting
4 https://group.legalandgeneral.com/en/newsroom/press-releases/british-women-hit-by-gender-pension-gap-at-every-stage-of-career 
5 https://www.ajbell.co.uk/news/baroness-morrissey-spearhead-gender-investment-gap-campaign-aj-bell 
6 https://www.youinvest.co.uk/sites/default/files/AJB-Money-Matters-Research-Report.pdf?_adal_ca=cg%3DOrganic.1646643567789&_adal_cw=1646642379821.1646643567789