Research in 2020 revealed the gender pension gap – the gap between the pension income of women and men – increased to 40.3% in 2018/19. This represents an average difference in pension income by gender of about £7,500 a year.
To tackle this issue, the insurance and personal finance profession is working together to improve women’s lifelong financial resilience and some of the root causes of women’s pension deficit.
We’re committed to helping to narrow this gap and to ensure financial outcomes are improved for all. Read on to find out what other steps are being taken to tackle the issues faced by women of all ages.
As part of its Insuring Women’s Futures initiative, the Chartered Insurance Institute (CII) is working with the personal finance and insurance sector, the government, and society as a whole to help women become more financially robust.
Based on its Securing the Financial Future of the Next Generation report, the CII has identified five key areas of activity which they are focusing on in their manifesto in order to provide a catalyst for change.
1. Improve women’s pension outcomes
Women’s pension deficit is the result of many complex financial and societal obstacles which accumulate throughout women’s lives. If a woman is paid a lower income, their contributions into a pension will be less. Small surprise then that the Financial Times reports that the average pension for women is £106,000 less than men.
It’s simple maths. An employer has to contribute 3% of someone’s income to the workplace pension scheme on top of the 5% made by the member of staff. If a man earns 7.4% more than a female colleague, then contributions will be greater as it is based on a higher amount.
Many women will have breaks in their working lives, or periods of part-time working, which further impact on the pension funds they accumulate. Often these reduced contributions happen earlier in women’s working lives, further exacerbating the problem as these funds would have had a longer period invested, thus giving even greater potential for growth. It’s easy to see how a women’s later-life financial security can be put in jeopardy.
As part of its manifesto, the CII is working to improve pension provisions for women by developing proposals and open dialogue with government, employers, and wider society. The organisation also hopes to provide women with the ability – and knowledge – to better plan for retirement.
2. Support young females’ financial mindfulness in navigating perils and pitfalls
Industry research has identified a series of “perils & pitfalls” which impact women’s lives and their financial wellbeing.
Whilst everyone will have different risks in their lives, the analysis helps identify several critical risks for women and the times in their lives when they will have heightened exposure. These risks can range from graduate debt to returning from maternity leave or death of a spouse. Failure to understand risks facing an individual can lead to lifelong consequences.
By raising awareness to these different issues, we aim to empower women to engage with their own financial risks so that they can develop risk awareness and make more informed financial choices.
3. Improve female financial inclusion in the moments that matter
A recent report in Financial Planning Today found that women were three times more likely than men to have their finances dealt with by their partner, and less likely to pay for face-to-face professional help.
In addition to this, in 2018 the CII identified six “Moments that Matter” in women’s lives, which include:
- Entering and re-entering the workplace
- Marriage and divorce
- Retirement and later life
As each moment has particular perils attached to it, the organisation has pledged to promote good practice in a bid to engage women in key decisions at these times.
Using financial advice to help women better understand their situation and which products are best suited to them, the CII aims to improve women’s financial resilience.
4. Set the standard in flexible working for carers and parents
As part of its commitment to help women, the CII has also pledged to develop good working practices within the financial and insurance sector. This means the institute will be encouraging employers to be more flexible to encourage women into the industry, providing a rewarding career that balances caring and professional needs.
5. Raise awareness of, and engagement in, women’s risks throughout society
Through its Insuring Women’s Futures initiative, the CII aims to change attitudes within society to ensure females are better supported, providing financial resilience for this and future generations.
In doing this, the organisation hopes to create more financial independence for all ages of women, and future generations of females.
Get in touch
At HFMC we believe everyone, regardless of gender, should have robust financial strategies, helping provide security and peace of mind for all of our clients. If you would like to discuss any of the above issues, or how you could better plan your financial future, please email or contact us on 020 7400 4700.