A number of factors including caring responsibilities and menopause are leaving women trailing men financially, a new report by AJ Bell has uncovered.
The report, published by the firm’s Money Matters hub, found just a quarter of women carried on paying into their pension at the same rate during parental leave and almost half of women have had their career and /or finances impacted by caring responsibilities outside of parenting.
‘Financial Wobbly Bits: Uncovering women’s financial wobbles and providing a toolkit to overcome them‘ showed that despite the advent of shared parental leave, there remains a stark difference in a couple’s working patterns after having children. Only just over half (55%) of women returned to work full time after having their first child, compared to 92% of men. This figure drops to a quarter of women by their third child, compared to 80% of men. AJ Bell said the steep cost of childcare plays a key role, with the research finding that three times as many women than men say they both pay for and take responsibility for childcare.
The report also found that almost half of women have had their career and /or finances impacted by caring responsibilities outside of parenting. One in six (15%) of women gave up work, while nearly a fifth (18%) cut their hours and 7% took on a lower-paid job, with the so-called ‘sandwich’ period of life resulting in many women caring for elderly parents at the same time as providing free childcare for grandchildren.
The menopause was also shown to have a significant impact on women’s finances, with one in 20 women who have gone through the menopause choosing to stop work as a result. A further one in 25 reduced their hours, while others have had to use up holiday days, sick days or take unpaid leave. AJ Bell said employers have a “vital role” to play in supporting women through the process. While more companies now have menopause policies, these are often still lacking or not well publicised to staff.
The situation can be even more challenging for single women, according to the findings of the report. Just a third of single women are confident they can live comfortably compared to 56% of married people. Single women also have less in their emergency savings pot and less in their pension than the average married couple. Single women have an average of just over £29,000 in their pension, compared to £32,000 on average for all women.
Helen Morrissey, founding ambassador of Money Matters by AJ Bell, said: “These Financial Wobbly Bits in life are often tricky to navigate and filled with emotion – from moving in with a partner to having your first child or hitting the menopause. Not all of them apply to every woman and for some they will be a minor speedbump while for others they will be a huge pothole. But we wanted to know how they affect the amount of money we have. What is crucial to this is looking at how can we stop that and fix the gender wealth gap – we don’t want to just uncover the problems but also want to provide the solutions to these financial hurdles that women face.”
Morrissey said the there is “no silver bullet” to level the playing field, with women themselves, employers, men and the financial industry all having a role to play.
“Some of the onus is on women themselves – asking for pay rises when they deserve them and pushing for the financial impact of family choices to be shared equally at home. Likewise, employers should continue to strive for the number of women in senior positions in their organisations to reflect the make-up of the wider business.
“Crucially, men have an important role to play too, and families can benefit everyone if they have open conversations about how they share the financial impact of caring responsibilities and time out from careers. The fourth element to this is financial services companies, which historically haven’t done a great job of marketing to women but many are now making strides forward in this area,” added Morrissey.
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