These and other reforms are likely to be vital to continue to reduce the gaps we see in earnings and career progression. These are long-running issues that will not be resolved overnight.
FTA: Are long-term financial planning needs different for women than men? What sort of nuances should advisers consider when it comes to advising female clients?
SB: All of us want financial stability and security but women often face challenges that affect their ability to achieve this. The positive news is women have never been in a better position to achieve this as their impact on the traditional workplace grows.
I still believe that financial advice is client specific and should be tailored to the needs of the individual, and their specific financial needs.
However, in the financial world woman often find themselves in a very different situation than their male counterparts, so there are some things an adviser needs to be conscious of when advising a female client.
These issues are:
- Women have a longer life expectancy. This increased longevity means that their retirement savings need to last longer too, so having a financial plan in place is crucial so their pension fund needs to last longer.
- Women are more likely to take career breaks which can mean loss of income and a break in their pension savings.
- Women are more likely to care for others and balance work and family by working part time and flexile working, which can impact any career progression and result in earning less income, which can impact their savings for retirement. This is a critical driver for lower levels of participation in the workforce for women, and much higher rates of part-time working, especially for women in their 30s and 40s.
- Financial planning can also be the last on the to-do list for a lot of women, who often shoulder the higher proportion of caring responsibilities.
FTA: Why do we talk about the gender pension and the gender protection gaps? What can financial services do to help close these gaps?
SB: Starting with the gender pension gap, the difference in savings is estimated to be £100,000 between a man and a woman, according to our 2020 Scottish Widows Women & Retirement Report, with average savings rates on the median wage over a 44-year career.
There are many reasons that women are on course to have £100,000 less in their pension than a man. The amount people save into their pensions is generally a percentage of their salary or income, so anything that reduces your income, will reduce your pension.
Women are more likely to face life events that will negatively affect how they can save for retirement such as taking time out to raise a family, manage caring responsibilities, be in lower paid work, or part time roles (75 per cent of part time workers are women, according to research).
The gender pay gap also plays its part so it’s important to raise awareness around how these challenges can impact retirement planning.
Moving on to protection, research shows 8.2m UK mortgage holders have no protection in place.
This equates to roughly 50 per cent of all UK mortgages which leaves the mortgage holder and their family financially exposed should they suffer a financial shock such as unemployment, ill-health that prevents them working, or worse case scenario, the death of a loved one.
Protection exists as an important benefit to help individuals build financial resilience.
As a provider, we are already highlighting the issue to raise awareness on protection and pensions.
