Something I was told recently really resonated, which was the idea of ‘using the privilege of your seat’. It is why I have been a champion of inclusion for some years and why it’s important we raise the subject of women and money.
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The issue is real but these conversations can easily tip into blame, when what we actually need is a practical look at what happens across a woman’s life, where our industry and every employer can do better, and why this is a societal issue not just a female one.
At Pimfa’s Women’s Symposium earlier this year, Baroness Nicky Morgan and I spoke about the salary gap, the pensions gap and the investment gap. But we kept coming back to something harder to put a number on, which is the sheer number of hats women are expected to wear, often at the same time, and the pressure of being visible in a career while also trying to be present as a parent or carer.
That combination, of public expectation and private caring responsibility, is where I think financial resilience starts to break down for a lot of women, long before anyone sits down to talk about pensions.
Women’s financial lives are not less disciplined than men’s. They are simply shaped differently, often by caring for children, sometimes for parents, and by decisions made out of what feels practical or expected at the time, without anyone stepping back to ask what they cost over 20 or 30 years.
Things are a lot better now since I first became a parent, with shared parental leave a godsend and a bonus for all in the family, but the cost to women is real.
The numbers bear this out. Research from St James’s Place found that just 27 per cent of women currently invest, compared with 43 per cent of men, and only a third have a financial plan in place at all. The same research found that 77 per cent of women who receive ongoing financial advice invest, against just 22 per cent of those who don’t, which demonstrates the industry has a really important role to play here; not just in offering advice, but in making sure women feel it is meant for them.
The other figure that struck a chord with me from that research was on career breaks. SJP’s modelling suggests a woman taking five years out of work at 30 could see her pension shortfall at retirement rise by more than £30,000. Most people taking that break are focused on the other responsibilities that life throws up and the reasons that led them to make that decision, not on their pension at 68. That’s precisely why this needs to be planned for by the industry, and employers, and not treated as an afterthought for women to manage alone.
I talk to my own daughters about this constantly. When my youngest was offered her first job, I told her not to accept the first number she was given. Her employer may not have thanked me. It’s a small thing, but pay at the start of a career compounds for decades, into pension contributions, into confidence, into what a woman feels she’s entitled to ask for later on. If we want to close the gap at 60, we have to start paying attention to it in our twenties.
The reality is that caring responsibilities will continue to fall disproportionately on women, and that isn’t something we should be trying to engineer away. Career breaks are a normal part of many women’s working lives, and family discussions with financial planners and advisers can work through the options.
There is a role here for employers, who can support flexible working and make sure pension contributions don’t quietly stop the moment someone reduces their hours. Flexible working, for example working from home, is a real opportunity for employers and employees alike, as that can allow someone to retain their hours rather than cut them, minimising the knock-on effect to pay and pension contributions.
There is a role for financial education too, which needs to start in schools and keep going through every life stage, not just once at the beginning. And there is a role for our profession, to build advice relationships with women earlier, not only once they’ve already built significant wealth.
This isn’t just about individual women. Every pound that stays out of the market because a woman doesn’t feel confident investing it, or every year of pension contributions missed during a career break, is also a drag on our wider economy. If we get this right, we’re not only helping women build more secure futures for themselves and their families, we’re freeing up more capital to work harder for the UK as a whole, and building a more resilient, better functioning financial system for everyone.
Financial resilience for women runs through pay, through pensions, through the way we support people during the moments when life gets complicated.
A single campaign unfortunately won’t fix that, but getting the everyday things right — pay in your twenties, advice in your thirties and forties, support at 50 — will help build a stronger financial system for everyone.
Liz Field is Chief Executive at Pimfa