Gender investment gap report reveals financial traps affecting women

The data forms part of a campaign to assist in closing the gender investment gap.

It reveals that just a quarter of women carried on paying into their pension at the same rate during parental leave, compared to 70% of men. In addition, 29% of women said they weren’t paying into a pension before they had children anyway, compared to just 8% of men.

Helena Morrissey, founding ambassador of Money Matters by AJ Bell, comments, “Life is full of Financial Wobbly Bits. We know from our previous research that women have less in savings, investments and pensions as they face a more uneven financial journey than men. But we wanted to work out why. What are the financial pitfalls that disproportionately affect women, and mean that they have less money?”

The survey found almost half of women have also had their career and/or finances impacted by caring responsibilities outside of parenting. Alongside this, menopause, now increasingly recognised for the derailing impact it can have on a woman’s career, was stated as the primary reason 1 in 20 menopausal women stopped working altogether.

Despite social advancements, women’s careers still take the biggest hit due to childcare responsibilities. Only 55% of women returned to work full time after having their first child, compared to 92% of men. By the third child this dropped to a quarter of women compared to 80% of men.

While some women choose to become stay at home parents or work part-time, the cost of private childcare will also be a prohibiting factor for full-time work. The average cost of full-time nursery for a child under two is £14,800 a year, which leaves little to nothing on the average £40,000 salary for essential expenses, like rent or a mortgage, food and bills.

Women’s long-term wealth has been hugely impacted by these issues and is a big contributor to the gender pensions gap.

Morrisey added, “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.

“The answers aren’t straightforward and there is no silver bullet. 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.”