Bridging the gender pensions gap: how can advisers take the lead?

Stuart Wilson is corporate marketing director at more2life

Although the UK arguably boasts more gender equality in society than ever before, the gender pensions gap continues to be a challenge – especially for older women who may not have enjoyed the social and economic freedoms that today’s graduates expect.

Recent research from more2life recently revealed that the gender pensions gap has widened to more than £180,000 among the over-55s, an increase of more than £26,000 since 2020.

This disparity comes despite the fact that women typically contribute more into their pension pots than men (9.4% of their income compared to just 8.3%), bringing the ongoing inequality into sharp focus.

Undeniably, the COVID-19 pandemic has been a factor in the widening of the gap, as it has impacted both the value of pension pots and the ability of people to save into them.

Indeed, our research uncovered that 30% of women over-55 say their financial situation has worsened since the start of the pandemic, limiting their ability to save for later life.

Whilst the gender pension gap is not a new phenomenon, the pandemic has made this issue even more pressing. Women are more likely to work in sectors hardest hit by the pandemic, such as hospitality and retail.

They are, therefore, most likely to be impacted by redundancies or the furlough scheme, with HMRC figures showing that there was consistently a greater number of women furloughed between July and December 2020 than men.

Advisers on the frontline

Given their position on the front line of financial services, advisers are uniquely placed to help women, and men, plan for later life and understand the myriad of solutions available to them.

Engaging with an adviser as early as possible is vital in order for clients to gain the greatest long-term benefit from the advice they receive.

However, unless it is via a workplace pension scheme or the client is independently wealthy, it is more likely that women will only seriously consider their financial position closer to retirement, when they have had time to build up assets.

This is an opportunity for advisers to engage with their female clients and support their aspirations by highlighting the benefits they can bring.

By taking a rounded view of a client’s assets, advisers can guide retirees towards the financial tools that make the most of their wealth, whether that is retirement income from workplace pensions, savings, investments or their property wealth.

Indeed, with many women falling foul of the gender pension gap, property is arguably more important to them than some of their male counterparts.

Key Group’s 2021 H1 Market Monitor found that almost twice as many single women (28%) took out equity release compared to single men (15%) in the first half of 2021 alone, highlighting the importance of property wealth.

Data has long supported the idea that more women use equity release due to longevity and, potentially, being widowed or coming to the end of their savings.

However, there is another growing group of women who may be looking to equity release – the ‘silver splitters’. As the number of couples divorcing at later stages of life rises, how this asset will be split and potentially even used to pay for the costs of divorce is now being more commonly considered

Whatever their circumstances, advisers need to support clients and help them understand how their home can help them in later life. Whilst they may have similar concerns to their male counterparts, women need advice that takes into account not only the gender pensions gap but also longevity and the potential to loose part of their income if their spouse dies.

The gender pension gap will take time and collaboration from industry and the Government to rectify but, in the meantime, advisers have a key role in helping female clients realise all their assets to boost their income in retirement and create the standard of living they deserve.