There continues to be a persistent gender ISA gap, despite women paying into more than half of all ISAs.
Data from HM Revenue & Customs show women still hold just over half (51%) of all ISAs and paid into over half of them in the 2023/24 tax year. Just over 11.8 million ISA holders were women in 2023/24, compared with 11.2 million men.
However, while they paid in to 54% of cash ISAs, they only paid in to 41% of stocks and shares ISAs.
HMRC’s data showed the gender ISA gap was £2,999 in 2023/24, with the average man’s ISA worth £39,370 compared to £36,371 for women.
Commenting on the figures, Sarah Coles, head of personal finance at AJ Bell, said part of the issue is that lower incomes mean that while women are making larger subscriptions, they may still be putting away smaller sums each.
Another significant issue is that women are heavily weighted towards cash.
Coles explained: “Given the fact that over time, investing tends to produce better returns than cash, it’s no surprise that men are building bigger ISAs.
“In the 2023/24 tax year this will have had slightly less impact, because savings rates were riding high. It’s why, during the year, the gender ISA gap narrowed very slightly from £3,119 in 2022/23 to £2,999 in 2023/24.
“However, this is likely to be a blip rather than a change of direction, because now savings rates are lower and being outpaced by investments, it’s highly likely to widen again.”
Coles said the role of investment returns is clear from ISA values at different ages. Under the age of 24, women have £876 more in their ISAs on average than men but men overtake by the age of 27-29 and the gap keeps growing until men have £5,215 more than women by the age of 60-62.
Coles said: “While women can’t do much to move the dial on the gender pay gap, they can make a significant difference to their own position by considering investing alongside their savings. Unfortunately, that’s easier said than done, because having lower average incomes, and facing changing working patterns through their careers can lead some women to feel they can’t afford the risks they associate with investment.”
Coles said women should understand the level of risk involved because it can be easy to overestimate the risk of investment losses and underestimate the risk that the value of cash can be eroded by inflation over time.
“One option is to start small. You can start investing from as little as £25 a month and commit to finding out more about investments as you go along. You can gain experience of the short-term ups and downs as well as the long-term growth, so you can build your confidence while you boost your long-term financial resilience,” Coles added.
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