Women and Finance: Bridging the Gap and Securing a Stronger Future

Despite significant progress in gender equality over the decades, women continue to face systemic challenges when it comes to managing their finances. From the gender pay gap to the pension gap and the difficulties of balancing career progression after motherhood, women are often placed at a financial disadvantage. But with the right knowledge and tools, they can navigate these challenges and secure financial independence.

The Gender Pay Gap: A Persistent Issue

The gender pay gap remains a key barrier to financial equality. According to the Office for National Statistics (ONS), in 2022, the UK gender pay gap for full-time employees was around 8.3%, meaning women earn significantly less than their male counterparts. This disparity is exacerbated in higher-paying industries and leadership roles, where fewer women are represented.

Why does this gap persist?

• Bias in Promotions: Studies suggest that women are often overlooked for promotions and salary increases. Even in industries where women represent a majority of the workforce, men are more likely to hold senior leadership positions.
• Career Disruptions: Maternity leave and childcare responsibilities often lead women to take career breaks, switch to part-time work, or opt for less demanding roles, which directly impacts their income potential.

Practical Tips:

1. Negotiate Your Salary: Research shows that women are less likely to negotiate their salary. If you’re offered a job, make sure to research the industry average and negotiate for fair pay.
2. Continued Education and Training: Invest in upskilling and professional development to strengthen your position and bargaining power for promotions and pay rises.
3. Track Your Achievements: Keep a record of your contributions and successes at work. This makes it easier to argue for raises and promotions based on your value to the company.

The Pension Gap: A Looming Financial Crisis

The gender pay gap inevitably leads to a pension gap. On average, women in the UK retire with 35% less in their pension pot compared to men, according to a report by Legal & General. This disparity places many women at risk of financial insecurity later in life.

The reasons for this gap are similar to those of the pay gap:

• Lower Lifetime Earnings: Women’s lower lifetime earnings result in lower pension contributions.
• Part-Time Work and Career Breaks: Many women work part-time or take breaks from work to care for children or elderly relatives, leading to reduced pension savings.
• Longer Life Expectancy: Women live longer than men, which means they need to stretch their retirement savings further.

Practical Tips:

1. Start Saving Early: The earlier you start contributing to your pension, the more time your money has to grow.
2. Understand Your Pension Scheme: Make sure you understand how your pension plan works, especially if you switch jobs or take a career break. Many companies offer matching contributions, which can be a great way to boost your savings.
3. Increase Contributions: If possible, increase your pension contributions, especially after pay rises or bonuses. Even a small percentage increase can make a significant difference over time.

Post-Motherhood Career Struggles

Returning to work after childbirth often comes with its own set of financial challenges. Many women face difficulties in career progression after maternity leave. Research from PwC suggests that only 27% of women feel they have access to adequate support to return to their careers after giving birth.

Barriers:

• Childcare Costs: The cost of childcare in the UK is among the highest in Europe, with many women finding it difficult to balance these costs with their income.
• Limited Flexible Working Options: Many women find that their employers are unwilling to accommodate flexible working hours or remote work options, forcing them to either downscale their careers or leave the workforce entirely.

Practical Tips:

1. Seek Flexible Working Arrangements: If you’re returning to work after maternity leave, inquire about flexible working options like remote work or reduced hours that still allow you to progress in your career.
2. Network with Other Working Mothers: Building a support network with other working mothers can provide valuable advice and support, both emotionally and professionally.
3. Invest in Childcare Planning: Explore all available options for affordable childcare, including government schemes that provide financial support for working parents.

Recommendations for Institutions and Government

Addressing these systemic issues requires a concerted effort from both employers and policymakers. Here are key recommendations for a more equitable financial future for women:

• Equal Pay Legislation: Strengthen and enforce equal pay legislation to ensure that women are paid the same as men for the same roles.
• Support for Working Mothers: Employers should offer more flexible working options, as well as comprehensive return-to-work programs that support women after maternity leave.
• Pension Support: Introduce policies that enable women to boost their pension contributions, especially after career breaks. This could include government top-ups or employer pension schemes that better support part-time workers.

Check out our podcast From Roots to Froots Episode 4. In this enlightening conversation, Leticia Fonseca shares her journey from marketing to a financial educator, emphasising the importance of financial literacy and empowerment, especially for women. She discusses her challenges, the significance of retirement planning, and practical steps to achieve financial wellness. Leticia highlights the need for a positive relationship with money and encourages listeners to take actionable steps towards their financial goals.

Conclusion

Women face significant financial challenges due to the gender pay and pension gaps and the difficulties of balancing work and motherhood. However, through negotiation, financial literacy, and a proactive approach to pensions and career planning, women can take control of their finances and overcome these barriers. By calling on businesses and the government to introduce more supportive measures, we can work towards a fairer and more equal financial future for all women.

Sources:

• Office for National Statistics (ONS), Gender Pay Gap Report
• Legal & General, Pension Gap Report
• PwC, Women in Work Index 2023