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Time to level up women’s finances

6 March 2021

To mark International Women’s Day, wealth management group Quilter has published six points it believes will help women to level up their finances. 

Address gender gap in the workplace

The Covid-19 pandemic has had a significant impact on gender equality, with women emerging more vulnerable to the negative effects. Figures from a recent McKinsey & Company study found that women’s jobs are 1.8 times more vulnerable to the crisis than men’s jobs, making up 39% of global employment but accounting for 54% of overall job losses.

Jane Goodland, corporate affairs director at Quilter, said: “Unfortunately, the picture has not been favourable for the upcoming generations. We know that the economic impact of the pandemic has been particularly challenging for young people and unfortunately younger women were impacted far greater than younger men. The support the government has put in place has been extraordinary and we appreciate not every job can be saved, but as we emerge from this crisis, it should be doing more to get women back into the workforce.”

Goodland called upon the government to urgently consider how its recent plan for jobs will benefit women and to encourage firms to consider what more can be done to ensure the workplace is one in which female talent can thrive.

Goodland added: “Increasing financial confidence through education and engagement will go a long way to ensure women participate more in the personal finances of the nation. Data has shown women often make better investment decisions and will make more sensible financial decisions, but they are often held back by a lack of confidence. As we rebuild, we should have an even greater focus on making policy decisions that are better informed by the challenges and barriers that exist for half the population.”

Female representation on boards

Significant progress has been made when it comes to greater diversity on boards. In 2011, 43% of all FTSE 350 boards did not have a single woman present but this number has dropped to zero over the past decade. However, Gemma Woodward, responsible investment director at Quilter, says that firms must go “much further.”

Woodward said: “Recent research shows that the vast majority of female company directors occupy non-executive roles rather than executive roles, which tend to come with a much lower level of pay. While the focus on boards is welcome, attention must be paid to promoting gender diversity in executive positions as well as in middle management and lower rungs of the business.

“There are a number of studies which show how greater gender diversity, and diversity more generally, improves both business performance and investment returns. Greater gender diversity also helps drive innovation and assists companies’ response to emerging risks and challenges.”

End pension injustice

Women’s pension pots are still significantly below their male counterparts, not helped by an “archaic pension taxation system” which leaves some women disadvantaged, according to Quilter.

The issue of net pay versus relief at source has long attracted criticism and while the government launched a consultation last July focused on how to fix the issue, there has been no further update.

Heather Owen, financial planner at Quilter, commented: “The issue is that net pay arrangements sees the lowest paid miss out on the government top up. Women are the overwhelming bearers of this injustice as they account for approximately two-thirds of the people impacted.

“It is impossible to comprehend how any female “levelling up” agenda can be achieved without such a system being updated.”

Gender protection gap

Women continue to shoulder more caring responsibilities than men, with research from the Office for National Statistics showing that women carry out an overall average of 60% more unpaid work than men. According to Quilter, this can feed into the gender pay gap and ultimately translate into women having a harder time securing the same mortgage products as their male counterparts.

Gemma Harle, managing director at Quilter, says: “Many people often get some form of protection like critical illness protection or life assurance from their employer as a workplace benefit. As women are more likely to take career breaks to take on the lion’s share of caring, it can mean that they are left unprotected. If the worst was to happen it can leave a family in a difficult financial position at the worst possible time.

“Making sure that both the primary carer in a family and the primary earner both have financial protection is very important. Ultimately though, caring responsibilities need to be better shared among the genders so that women are not so heavily relied upon and there is not such a disparity in pay.”

Overhaul child benefit rules

Quilter has urged the government to review its child benefit rules, amid concern that the current system put women’s state pensions at risk.

The introduction of means-tested child benefit in 2013 has meant women are no longer automatically entitled to national insurance contributions needed in order to receive a full state pension.

According to Rachael Griffin, tax and financial planning expert at Quilter, this could lead to women receiving a “vastly reduced” state pension.

Griffin explained: “This is yet another example of an over-complicated system disproportionately impacting women, who are expected to spend hours trying to understand needlessly intricate benefit rules at one of the most challenging times of their lives when they are likely to be sleep deprived.”

Griffin said the government’s failure to review the £50,000 threshold since its introduction eight years ago means many more families will have been caught unawares as incomes increased.

Griffin added: “Getting it wrong could mean they are left without a state pension for up to 12 years as the UK’s tax system will not recognise them for national insurance purposes if they do not work or claim child benefit.

“This needs a common-sense review and at the very least a commitment to fully backdated state pension credits when people sign up late for child benefit.”

Make financial advice more accessible

The FCA estimates that only 40% of adults who took financial advice were female. In an industry that has traditionally been dominated by men and catered predominantly to male needs, change is needed, says Quilter.

Quilter believes the industry needs to better cater for specific female needs, while those working within it need to better reflect those they are servicing.

Amanda Cassidy, managing director at Quilter, said: “Taking advice is a personal and emotive process and it is understandable that women often say that they would prefer to see a female financial adviser.

“By 2025, the ONS expects 65% of the UK’s wealth to be controlled by women and therefore it’s up to the industry to make sure that more women can access the type of advice that they want and make their wealth work as hard as possible for them.”

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