A new report calls for an overhaul of pensions policy and financial advice to address the current pensions gap, which sees men accumulating a whopping 75 per cent more in their pension pots by age 60 than women.
The report, from the University of Edinburgh, supported by Evelyn Partners, the UK wealth manager entrusted with £67 billion of its clients’ assets, calls on the financial services sector to recognise the hidden systemic, social and situational factors preventing women from saving and planning for later life, rather than focusing on their perceived ‘lack of confidence’ in financial planning.
Nearly 15 million people in the UK are not saving enough for retirement, according to analysis by the Department for Work and Pensions (DWP), signalling a system-wide engagement crisis - and women are disproportionally affected. The DWP figures show that men hold a median amount of £75,000 in Defined Contribution (DC) pension wealth - the most common type of private workplace pension - by age 59, compared to £19,000 for women.
Women’s lower earnings (the gender pay gap), employment gaps and part-time work due to child rearing, and their disproportionate burden of unpaid care for family members, all play a role, as do gender stereotypes and the ‘mental load’, the report says.
And, as we live and work for longer, often in multiple careers, the financial system must evolve to accommodate these changes and prevent a pensions timebomb, the authors say.
Office of National Statistics figures show that women on average spend an extra hour a day on visible childcare and housework, and carry out 73% of cognitive labour – the mental load of organising family life - compared to their male partners, related research has found.
The author of the report It’s Not About Confidence: The Hidden Forces Shaping Women’s Financial Futures’ is Emily Shipp, a psychologist and Associate of the Edinburgh Futures Institute (EFI). Shipp said: “For too long, the ‘confidence gap’ narrative we see in financial advice and media reports has masked the real systemic, situational and social factors that result in the pensions gulf.
“Mental load and time scarcity operate together. Women are more likely to carry the ongoing cognitive labour of anticipating and coordinating care, while also spending significantly more time on unpaid work. These pressures reduce both the mental bandwidth and the available time needed for sustained engagement with long-term financial planning.
“Historically, financial advice and pensions policy have centred on typically male, linear career trajectories and financial goals, rather than the multi-phase, care-interrupted lives many women navigate.
“Redesigning pensions policy and financial environments to better serve more varied priorities and life courses would better serve all genders as we move towards longer, multi-phase lives.”
DC pensions require decision making around fund choice, contribution levels and consolidation that demands active engagement beyond a 'set and forget' approach, which is little understood by the general population, the report highlights, and contributes to lower overall pensions wealth.
Emma Sterland, Chief Financial Planning Officer at Evelyn Partners, said: “We welcome this important new report from the University of Edinburgh’s Futures Institute. Its thought-provoking insights challenge entrenched narratives around women and wealth, shining a light on the complex structural barriers that women face as they build their financial security over a lifetime.
“As the founding partner of EFI’s Compassion in Financial Services Hub, which launched early last year, Evelyn Partners is proud to support research that helps to foster a more inclusive, sustainable and compassionate financial system.”
The report was produced by the Compassion in Financial Services Hub (CFSH) at Edinburgh Futures Institute, supported by Edinburgh Innovations, the University of Edinburgh’s commercialisation service.
Tobi Schneider, fintech sector lead at Edinburgh Innovations and CFSH co-director, is convening additional research around women and wealth: “This is an important report, recognising that society is changing, and that financial planning is becoming more and more necessary. With an ageing population, without action, we are sleepwalking into financial disaster for a large proportion of people.”
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