There has been significant progress in recent years around equality for women. However, unfortunately even in 2024, women still face multiple financial gaps that have a significant impact on their financial situation in the long-term.
The Gender Pay Gap in the UK
The Gender Pay Gap is where for full time employees, women in the UK were paid 7.7% less than the average man in April 2023*. This means that because women are receiving a lower salary then they cannot save or invest as much of their salary as men are able to. It also has a direct impact on the amount they save into their pensions. The lower the salary, the less the employer has to pay into the employees pension according to auto-enrolment legislation. This can make a significant difference to women’s final pension values by the time they retire.
The Motherhood Penalty
It is common for women to adjust their careers to accommodate family life whereas the man typically continues to work full time. Many women do not return to work at all after having a child or if they do choose to do so then it is common for women to return to work on a part time basis.
However, this means that many women do not earn over £10,000 and therefore are not eligible for a workplace pension at all. This means that they are responsible for saving into a private pension themselves. However as their earnings are now much lower than when they worked full time it is unlikely that pension savings will be a priority which further increases the gender pension gap.
Life Span
Women typically live at least 4 years longer than men**. This means that women have to have extra savings to support themselves for longer in later life. This makes the gender pay gap more concerning as women may find that they have to rely solely on the State Pension for income which means that they are unlikely to be able to afford luxuries such as trips away and holidays.
How women can secure their financial future
If you’ve taken a career gap in the last six years, you could think about paying voluntary National Insurance contributions to increase the amount of State Pension you’ll receive when you retire. You should aim to try to get the 35 minimum qualifying years of National Insurance contributions so that you do receive the maximum amount of State Pension.
You could also consider increasing your pension contributions into either a private pension or your workplace pension. It is worth checking how much your workplace will match your contribution. Auto-enrolment means employers must pay in 3% of your salary to your pension, however many companies will increase this amount if you also pay in more yourself.
Seek financial advice
Getting your finances on track and planning for your financial future can be overwhelming. At Four Wealth Management, we can help you to make a financial plan.
Book a meeting online now or call us on 0117 973 0500.
*‘Gender pay gap in the UK: 2023′, ONS, November 2023
**’National Life Tables’, ONS January 2024
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