Women in Financial Planning

First launched in 2018, Fidelity International’s Women and Money campaign is designed to help understand many of the challenges women face when it comes to financial empowerment, from the gender pay, pension, savings and investment gaps that stand between men and women. It also considers the steps required to narrow the gender financial gaps.

The latest research, published in May 2024, highlights the stark reality many women face as they navigate a complex financial landscape. Key findings from the study show:

• While women (72%) are only slightly less likely than men (80%) to hold savings, women hold considerably less on average in savings than men do (£33,810 vs £50,500). 
• Women (28%) are far less likely than men (51%) to hold investments and they also hold far less in their investments than men do (£54,040 vs £72,170). What’s more, women (27%) are far less likely than men (45%) to agree that investing is for them. 
• Although half (52%) of women in work hold employer pensions, this falls some way short of men (66%). Women (22%) are also less likely than men (37%) to hold personal pensions. Women hold far less on average in their pension pot than men do (£51,780 vs £82,760). 
• Women expect to retire a year younger than men (age 65 vs age 66), but expect a lower income in retirement (£30,300 vs £38,130). Over half of women do not think they will have enough to fund the income they want in retirement.

Source: Fidelity Global Women & Money Report, UK results, May 2024.
 

The good news is the gender pay gap – the difference between the average hourly earnings (excluding overtime) of men and women – is closing. In April 2024, it stood at 7%, which is down from 7.5% in 2023. The bad news is, it's taking too long. Over the last ten years, it's fallen by approximately a quarter among full-time employees¹. 

A number of factors are likely to come into play when trying to understand why the gender pay gap exists. A higher proportion of women take up jobs that offer less financial reward (such as administration). And many high-paying sectors are disproportionately made up of male workers, such as IT. More women also work part-time. And women are still less likely to progress up the career ladder into high-paying senior roles.

Then there are the career gaps associated with caring duties – whether that’s for children or elderly relatives. And other challenges unique to women, such as the menopause. There is also a lack of transparency around pay and women aren’t as confident about asking for equal pay for equal work.

While 7% is the figure for all full-time employees in the UK, the gap is wider in certain groups and occupations. Other data released by the Office of National Statistics, for example, shows the following¹:

• The gap is much greater for employees aged 40 years and over compared to those aged under 40 years. For example, it was 13.5% for those aged 60 years and over compared to just 1.3% for those aged 22 to 29 years old.
• The gap is larger among high-earning employees (15.5%) than for those that are lower paid (2.7%).
• The gap was highest in occupations regarded as skilled trades (15.7%) and lowest in the caring, leisure and other service occupations (2.3%).

More detail on the gender pay gap can be found on the ONS website.

Source: ¹ Office for National Statistics: Gender Pay Gap in the UK: 2024

It's often said that it takes a village to raise a child. It also takes quite a bit of money too. When you factor in the gender pay gap, also known as the parenthood gap, it can put women on the financial back foot.

According to Maternity Action, UK women on maternity leave are some of the worst paid among their international peers. Around 13% receive Occupational Maternity Pay from their employer¹, while the vast majority receive Statutory Maternity Pay or Maternity Allowance – just £184.03 per week at the basic rate.²

A report by Maternity Action, which explores pregnancy, new motherhood and the cost-of-living crisis, found that 58% of respondents to its 2023 cost-of-living crisis survey returned early from maternity leave, or were planning to do so, for financial reasons – an increase from 42% in 2022¹.

If a woman is employed, they’re eligible for statutory maternity leave. Typically, it’s up to 52 weeks and it’s broken down into ordinary maternity leave for the first 26 weeks, and the last 26 weeks is known as additional maternity leave.

The minimum amount of time a woman must take off after having a baby is two weeks after the birth of the child. This goes up to four weeks if they work in a factory. If they have a partner, paternity or parental leave may be available – especially if the partner is employed. When having a baby using a surrogate or adopting a child, the couple may be able to get shared parental leave and pay. They can share up to 50 weeks’ leave and 37 weeks’ pay between them. 

You can find more about maternity pay and leave at gov.uk.

Sources:
¹ Cost-of-Living on Maternity Leave Survey 2024 report
² Maternity pay and leave: Pay - GOV.UK

According to the report ‘Bridging the Gender Pension Gap’ from mutual life and pensions company Royal London, women are more likely than men to reduce their hours – or exit work altogether – in their 50s, which is the prime age bracket for pension saving¹.

To understand the impact this could have on a woman’s pension pot, Royal London calculated the potential impact the menopause could have on a 50-year-old woman in full-time work with a salary of £40,000 and a pension fund of £100,000.

If she works full time until State Pension age, she could be around £126,000 better off compared to another woman who stops working at age 50, who instead of having a pension pot of £355,510 would have a pension pot of £229,202¹. So, if a woman had to reduce their hours by 50% at age 50 due to their menopause symptoms, this would reduce their pension pot by £63,000, so they’d have £292,356 at State Pension age. This was calculated using wage increases of 2.5% each year, a growth rate of 5% (not including charges) and total pension contributions of 10%, split between the employee and her employer².

This kind of reduction in retirement savings could have a very real impact on how comfortably a woman could retire.

It goes to show that being able to save during this stage of life is critical to achieving healthier savings – as it’s also a time when many women are at the peak of their careers.

Sources:
¹ Bridging the Gender Pensions Gap - Royal London - May 2022
² Could the menopause affect your retirement? - Royal London - 6 June 2024