Why working with a financial planner can help your female clients close the gender pensions gap

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Thanks to the tireless effort of equality activists and campaigners, the gender pay gap has been steadily shrinking in recent decades. But while great strides have been made towards gender parity, the difference in the size of salaries is still noticeable.

According to data from the Guardian, women in the UK are now paid 90p for every £1 earned by men. While this gap is smaller than it has been in the past, it can still have a considerable impact over time.

In fact, a recent report published in MoneyAge shows that women would need to work an extra 18 years in full-time employment to earn the same amount of pension wealth as men.

If you have female clients who want to enjoy a comfortable retirement, read on to find out how working with a financial planner can really benefit them.

The average woman retires with £136,800 less in pension wealth than the average man

The gender pay gap can affect women’s finances in a number of ways, but perhaps the most obvious one concerns pension wealth. This can be a serious problem, as it means your female clients may not have enough to enjoy the lifestyle they want in retirement.

According to the report published in MoneyAge, by the time women retire they will have pension assets worth an average of £69,000. This is a shocking £136,800 less than the average man would be able to save over the same time frame.

On top of this, the report notes that, while the size of the average UK pension fund has almost doubled to £111,600 in recent decades, women’s savings have hardly risen at all. Indeed, when you take into account the rising cost of living, they may even be in a worse position than before.

One of the biggest issues with the gender pension gap is that not only do women have less wealth to support themselves in retirement, but they also typically live longer than men. This means they’ll have to rely on a smaller amount to support themselves for a longer period.

According to the Office for National Statistics, the female life expectancy in the UK is 82.9, which is almost four years higher than the male life expectancy of 79.

If your female clients don’t have enough wealth set aside to support them throughout retirement, they may not be able to enjoy the comfortable lifestyle they want. Thankfully, seeking professional advice can help them to avoid this prospect.

Increasing their workplace pension contributions can help your clients to build pension wealth

Working with a financial planner can have a variety of useful benefits for your clients. For a start, we can help them to maximise their allowances and build their wealth effectively.

When saving for retirement, workplace pensions can be hugely useful. Not only do they benefit from tax relief, which we discussed in another article, but also from employer contributions. This can mean that they can be a great way to build wealth.

Unless your clients have explicitly opted out, they typically pay 8% of their salary into a workplace pension. Of this, they usually pay 5% (including tax relief) while their employer pays a further 3%.

Of course, this is only the minimum amount and so if your clients want to grow their pension, they may want to consider raising their contributions. By doing so, they can easily put aside more money for the future, as well as take advantage of government tax relief.

Divorce can play a key role in women having lower pension assets

Divorce is one of the key factors that results in many women having lower pension wealth.

On divorce, pensions can often be the most significant asset – even more than the family home. Despite this, research published by the Telegraph found that 7 in 10 divorcees don’t share pensions, while around 1 in 5 people admitted they had not even considered dividing pension wealth during divorce proceedings.

Working with a financial planner can help your female clients to establish the value of any pension assets to ensure a fair split on divorce.

A planner can help your clients to properly assess their risk tolerance when investing

Another way that seeking professional advice can help your clients to reach their long-term goals is by working with them to review their risk tolerance when investing. This can enable them to see stronger returns so they can be more confident that that they’ll have enough wealth for retirement.

Typically, the more risk an investment has, the greater its potential for growth. For example, government bonds are very safe but may also offer low returns. Conversely, stocks and shares can be riskier but may increase in value much more quickly.

Of course, it’s also important to bear in mind that there can be downsides to this, as the value of high-risk investments may fall by a greater amount during a market downturn. That’s why it’s important for your clients to seek advice first, so they know if it’s the right decision for them.

Working with a financial planner can give your female clients much greater confidence, knowing that they’re building their wealth effectively and are on track for the retirement they want.

Get in touch

If you have female clients who could benefit from working with a financial planner, we can help. Email enquiries@blackswanfp.co.uk or contact us on 020 3828 8100.


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