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It is 100 years since British women got the vote, and nearly 50 since we won the right to equal pay for equal work. Progress is being made on closing the gender pay gap, and women are increasingly represented at the highest levels of business and public life. So can young women today look forward to a more secure financial future than their mothers and grandmothers?
The answer is an emphatic no.
A sobering report by the Chartered Insurance Institute has examined rising levels of financial risk facing young British women today, and concluded they are “less likely to accumulate wealth over the course of their lifetime than previous generations”.
How so? Some risks are “old problems”. Women live for longer than men, so need to save more to fund a comfortable retirement. Yet they save less — typically because women have lower-paid jobs, and are more likely to take a career break or work part-time to care for their families, which further impacts earnings potential.
Part of a CII initiative called Insuring Women’s Futures, the report evaluated the main financial risks facing young women today. Examining the “new problems” of rising student debt, the difficulty of saving to buy a property and the looming care crisis, the researchers concluded that, combined, these risk factors will ultimately hurt young women’s finances much more than young men’s.
Many of the facts and figures in the report are depressing, but there are also some excellent suggestions of what women — and men — can do to bring about change.
The CII argues that women’s “financial resilience” is declining due to higher levels of debt when young, continued lower earnings, reduced home ownership and family pressure for care lasting longer through life (both bringing up children and caring for elderly relatives). All of this has a greater impact on women’s ability to save.
The CII report is using the hashtag #momentsthatmatter to promote areas where greater awareness is most needed.
Top of the list is careers advice provided in schools. Women get better grades than men, but lose marks when it comes to degree subject choice. Maths, technology, computer sciences and engineering offer the greatest earnings potential, yet female students are in a minority.
All graduates face the problem of mounting student debt, but current data show that female grads go into lower-paid jobs, and therefore take longer than men to pay it back. Among finance professionals, for example, men will typically have repaid their loans by age 38, rising to 51 for women.
Lower earnings are exacerbated by the gender pay gap and the “part-time penalty”. After having children, about 60 per cent of women return to work part time, but those who do so earn 30 per cent less than those who work full time, the report said, citing ONS data. Three out of five professional women return to lower-skilled or lower-paid jobs after career breaks.
All of these factors inhibit what can be saved towards retirement — and the CII says young women are less likely to save for the future than both young men and older women.
Your 40s and 50s are typically peak earnings years, when any shortfall in savings can be topped up. Yet today, more women in their 40s are having children than those aged under 20. Those who marry tend to do better financially than those who cohabit or divorce.
Increasingly, women over 50 are providing care for other adults — a quarter of women aged 54-60 currently have caring responsibilities compared to one in six men. Over the next 20 years, a 40 per cent increase in informal caring is expected. Will women perform the bulk of this too?
By age 60-64, women have average pension wealth of £35,700 — just one-quarter of the amount held by the average man. Yet young women today risk ending up with even less.
And after a lifetime of looking after everyone else, women face greater challenges in funding their own care needs. They live for longer and their care is likely to be more expensive — double the cost of men, according to the CII. For those retiring today, assets such as property prove crucial for meeting these bills. Yet Generation Rent cannot rely on this route to riches.
So what can be done? The CII, which has set up an industry taskforce to work with policymakers, says the immediate challenge is to engage with women, raising awareness of the increased financial risks they face before it is too late for them to do anything about it.
Some solutions floated in the report include a review of taxation systems to balance childcare costs with financial provision for later life — perhaps in the form of childcare tax pension credits — and greater incentives for employers to offer assistance, including access to financial planning.
In fact, better access to financial advice was key to addressing all of the “moments” of vulnerability. So why is it that even the most basic financial advice is still something that only the wealthiest can afford?
Auto enrolment has provided a strong nudge towards workplace pension saving, but currently excludes many low and part-time workers. And many studies have found women are less confident than men when it comes to investing.
Previous research by the FT and BritainThinks found that women were turned off by the way many financial products and services were marketed. The fact that the asset management industry employs a woefully small number of women could partly explain this disconnect.
But any attitude that investing is “just for men” leads to another risk factor — keeping your long-term savings in cash, where they will not keep pace with inflation.
All the choices we make have consequences. The report suggests attempting to “cost” these on specially designed apps to help women project the future impact.
This could highlight the value of starting to save early and consistently for later life. Perhaps the grim outlook will prompt more women to agitate for better pay and career progression, or even to campaign for political change.
Who knows, maybe more 18-year-old women will opt to study a Stem subject at university, not have children, then move to a far-flung country once their career is established so they cannot be roped into caring for elderly relatives?
In the face of past inequalities, our female forebears took to the streets and protested. After reading this report, I despaired at why we are still shouting to be heard. There are many causes of financial inequality. For the sake of all the women in your life, don’t let ignorance be one of them.