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Why women have to work harder to save

Why women have to work harder to save

In the battle for gender equality there is one area where women seem to be losing ground: money.

A report out this week from the Institute of Fiscal Studies (IFS) revealed more than a million women in their early 60s have been made poorer by raising the age at which people can take the state pension.

The campaign group, Women Against State Pension Age Inequality (Waspi) has been fighting for some sort of transitional arrangement, which while it is gaining support in some quarters does not look like it will happen.

There are plenty of people arguing on behalf of Waspi and against, and I’m not going to get into that argument now, but the IFS report does serve as a reminder that women need to work harder than men to ensure they save enough.

While great strides have been made in gender equality, money is still one area that women fall short. Typically, women still take on the majority of caring responsibilities, whether that be children, disabled relatives, or elderly parents, and this hampers their ability to earn and to save.

Research by Zurich showed there isn’t just a gender gap in the state pension as women also face a shortfall in their workplace pensions. They are hit by a triple whammy of smaller salaries, more greater career breaks and men (who are not taking career breaks) moving into higher-paid, senior positions ahead of women.

And this triple whammy is costly. In fact it’s costly to the tune of £47,000 over a woman’s working life. According to Zurich, the insurer, that’s the sum that women miss out on in employer pension contributions over their working life, and last year on average, men aged under 35 received £217 more in employer pension contributions than women of the same age.

The fact women receive less is due to the persistence of lower salaries when compared to men, and as employer pension contributions are paid as a percentage of salary, women lose out.

All these factors set us up for a retirement on the breadline. But we’re maybe not helping ourselves either. When I write about women and money, I often think back to an article I wrote five years ago that looked at how men and women save.

Interestingly, when men thought about saving they did so for the long term, investing their cash and locking it into pensions. Women on the other hand were more short-term in their thinking, and more likely to save for a rainy day fund that could protect their family in the event of an emergency.

In an ideal world, of course, we’d all have an easily accessible rainy day fund and long-term savings to provide a comfortable retirement. As it stands, 20% of women aged 55 to 65 have no retirement savings, according to Aegon, and women of this age that have saved have put aside £24,900 compared to £73,600 for the average man of the same age.

What these figures, and attitudes to long and short-term savings, tells me is that women need to be a bit more selfish. They need to put their retirement first and not see their savings as ‘family’ money to dip into when needed. In short, we have to mimic men, and start locking away our money and be brave enough to invest it.

Research from RateSetter shows that women are half as likely to hold stocks and shares as a man, and men are more likely to put their money into investment products - 66% of men compared to 48% of women.

The government is taking steps to close the gender gap in pay and positions of power, requiring larger companies to disclose the pay gap between male and female staff from next April.

Minister for women and equalities Justine Greening said eliminating work-related gender gaps could boost the economy by as much as £150 billion but until that pay rise comes in, women need to take responsibilities for their savings - and probably work harder to save than their male counterparts.

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