Rethink pensions policy to address gender gap, new research says
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A new report by the University of Edinburgh calls for an overhaul of pensions policy and financial advice to tackle structural inequalities holding women back, and says the narrative that women lack confidence in financial matters falls short.
Drawing on psychological research, ‘It’s not about confidence: the hidden forces shaping women’s financial outcomes' by behavioural researcher Emily Shipp and supported by Evelyn Partners, says focusing on individual traits obscures the systemic, social and situational conditions that shape women’s long-term financial outcomes.
The gender pensions gap is widening, with a 75% gap in defined contribution pension wealth according to the Department for Work and Pensions, despite working women contributing, on average, a similar proportion of earnings as men. This means men have a median £75,000 in their DC pension by age 59, but women have just £19,000.
The research suggests that while caring responsibilities and labour market inequalities explain much of the wealth gap, they do not fully explain why women disengage from financial planning.
“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,” said Shipp.
Lack of spare time and mental load are a crucial factors in why women are under-engaged, she suggests: “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.”
Women on average spend an extra hour a day on visible childcare and housework, the Office of National Statistics has found, and carry out 73% of cognitive labour to organise family life compared with their male partners, according to related research.
Shipp wants to see pensions policy and financial environments redesigned to better serve more varied priorities and life courses rather than being tailored to a linear, historically ‘male’ career.
The report proposes the system should change to value unpaid care by applying carers’ pension credits above existing state pension earnings, and to design DC pensions that do not compound care-related contribution gaps. It also calls for the gender impact of the Pensions Commission proposals and Targeted Support to be assessed.
Non-linear careers need to become normalised, the study argues. It also recommends using examples where women take the lead on long-term financial planning, while the ‘lack of confidence’ narrative should be dropped. Greater diversity among financial advisers and a focus on women’s long-term financial needs within joint advice are further steps to be taken, the report said.
Emma Sterland, chief financial planning officer at Evelyn Partners, welcomed the research: “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.”
Drawing on psychological research, ‘It’s not about confidence: the hidden forces shaping women’s financial outcomes' by behavioural researcher Emily Shipp and supported by Evelyn Partners, says focusing on individual traits obscures the systemic, social and situational conditions that shape women’s long-term financial outcomes.
The gender pensions gap is widening, with a 75% gap in defined contribution pension wealth according to the Department for Work and Pensions, despite working women contributing, on average, a similar proportion of earnings as men. This means men have a median £75,000 in their DC pension by age 59, but women have just £19,000.
The research suggests that while caring responsibilities and labour market inequalities explain much of the wealth gap, they do not fully explain why women disengage from financial planning.
“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,” said Shipp.
Lack of spare time and mental load are a crucial factors in why women are under-engaged, she suggests: “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.”
Women on average spend an extra hour a day on visible childcare and housework, the Office of National Statistics has found, and carry out 73% of cognitive labour to organise family life compared with their male partners, according to related research.
Shipp wants to see pensions policy and financial environments redesigned to better serve more varied priorities and life courses rather than being tailored to a linear, historically ‘male’ career.
The report proposes the system should change to value unpaid care by applying carers’ pension credits above existing state pension earnings, and to design DC pensions that do not compound care-related contribution gaps. It also calls for the gender impact of the Pensions Commission proposals and Targeted Support to be assessed.
Non-linear careers need to become normalised, the study argues. It also recommends using examples where women take the lead on long-term financial planning, while the ‘lack of confidence’ narrative should be dropped. Greater diversity among financial advisers and a focus on women’s long-term financial needs within joint advice are further steps to be taken, the report said.
Emma Sterland, chief financial planning officer at Evelyn Partners, welcomed the research: “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.”
The report was produced by the Compassion in Financial Services Hub 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. He said: “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.”
