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Over the past two years, UK-registered companies (with over 250 employees) have been required to publish their gender pay gaps highlighting, particularly in the financial services sector, that women are being paid far less than men. Unfortunately, financial inequality doesn’t end there.
What appears to have slipped under the radar is the alarming differences in men’s and women’s pensions across the UK population.
It has recently been estimated that the gender pensions income gap stood at 39.9%* with the average female pensioner £7,000 p.a. poorer than their male equivalent indicating just how far behind women are in terms of their savings for retirement.
Although similar factors could be behind both salary and pension gaps – such as maternity leave, lack of flexible working preventing a return to work and less women in senior roles, it has been indicated that there could be many more factors at play; the language used in the marketing and advertising for savings and investments products being geared towards men, the notion that men tend to make the bigger financial decisions in a household and, due to the gender pay gap, men having more disposable income.
Amid a focus on a pensions crisis in the UK, clearly action needs to be taken to address this huge gap, and quickly.
In order to explore the causes of such a high gender pensions gap and in an exciting development for me as someone who is so passionate about diversity in the investment industry, Research in Finance and City Hive, the network for change in the asset management industry, have joined forces to unearth the root causes of this financial inequality and, more importantly propose solutions that will encourage more pension saving and investing by women, while also providing investment businesses with opportunities to expand their client base.
With the support of key asset management players, Research in Finance will survey over 2,000 individuals (male and female) to understand the differences in their financial decision-making behaviour. To carry out further exploration, focus groups will be held across the country to gain a detailed understanding of the individuals behind the stats and draw insights from a spectrum of women in a mid-career age bracket, of varying occupations and income level.
The research objectives include:
• Ascertain the levels of knowledge and engagement around financial literacy
• Pinpoint causes of the pensions gap and barriers to addressing it
• Encourage understanding, knowledge and participation in the industry
The latter point is the most important; with the information we find we plan to help asset managers better understand the financials needs of women in their client base, their investment profiles and behaviours, and ultimately encourage the industry to work together in closing that near 40% gap in pension pots.
The report is expected to be published in the first half of 2020.
*For 2017-2018, according to Tackling the Gender Pension Gap 2019 by Prospect