View more on these topics

Quilter: Planning points impacting women more than men

Factors such as longevity and career breaks can negatively affect a woman’s long-term financial situation

International Women’s Day, celebrated on 8 March, ran with a theme of “balance for better. This highlights balance in every sense – and finances need to be one of them. While financial planning is not an inherently gender-specific process, there are some planning points likely to impact women disproportionately compared with men.

Pensions
Firstly, women are more likely to live longer than men but are also more likely to live for longer in poor health. The average woman now lives for approximately 19 years in poor health, increasing the time they are reliant on their pension.

Despite this, women can find they have smaller pension pots than men and may also save less into them.

Research shows that men are, on average, saving almost double what women are each month towards their retirement (£301 versus £171 respectively).

Malcolm McLean: How to make pensions system fairer for women

“Start early when it comes to saving” is an adage spouted by many and its importance should not be underestimated. But, for some, it is even more important, including women and anyone who might take a career break.

Our analysis shows that women who take a two-year career break early on in their saving career can end up with 7 per cent less in their pension pot. It is even worse if they do not save into their pension until after a career break, ending up with around 11 per cent less than men who started later in life.

Women should also ensure they do not suffer with a reduced state pension when taking career breaks, as they are subsequently at a higher risk of failing to collect National Insurance credits, which will impact the overall size of the state pension. If someone is not working and looking after a young family, they will not automatically accrue NI credits, creating a gap in their records.

The way to combat this is by making sure they claim for child benefit even if they do not want to receive child benefit payments, as it ensures they gain NI credits.

Protection
Another potential ramification of taking a career break is that it can leave a family under-protected.

Due to women traditionally being more likely to take on the responsibility of the main carer for young children and deciding to leave the workplace, they also leave behind any employee benefits, such as protection.

Typically, people may think about the main earner in a family, regardless of gender, as having the greatest need for protection.

However, the consequences of the primary carer falling ill or passing away can also be disastrous.

If this does happen and they are not covered by a form of protection, it can have a negative impact on the family’s earning potential, as the primary earner will need to reduce their working hours or pay for additional childcare.

Trusts
As families become increasingly complex, it can prove harder to make sure wealth is passed down to the intended beneficiaries.

For example, if a married woman has an inheritance, which she then specifically earmarks for her children’s education, it is worth thinking about putting the money in trust.

Profile: Susan Hill on making planning appeal to women

Doing so shields it from potential misuse as, if she died without leaving a will, the money would pass over to her husband who could then decide to spend it differently. Similarly, trusts can help protect the wealth in the event of a divorce.

It is important for any woman to make sure they have their own financial plan in place, regardless of their financial circumstances or relationship status. Advisers can play a key role in this.

According to our research, 32 per cent of women who had seen an adviser believed they had benefited a lot from the experience, compared with 25 per cent of men who thought the same.

Overall, 79 per cent of women who had seen an adviser believed they had benefited in some way from the experience.

Rachael Griffin is tax and financial planning expert at Quilter

Recommended

The future of vertical integration

Have we entered a new era for the investment distribution landscape? In the post-pension freedoms world where demand for advice has increased, so has the demand for distribution from product providers. While much has been written about moves by household names like Standard Life Aberdeen and Prudential to establish in-house financial planning businesses, less attention […]

Fire-Blaze-700.jpg
20

FCA draws blank on phoenixing estimates

The FCA has drawn a blank on providing an estimate of the level of so-called “phoenixing” by financial advice firms. Phoenixing is the term used to describe the practice where directors of advice firms with impending complaints wind the firm down, so do not pay out on the claims, which then have to be handled […]

HMRC transaction figures show slow start to year

There were 0.8 per cent more residential property transactions in January 2019 than in December 2018, according to latest figures from HMRC. This equates to 101,170 properties transacted when counted on a seasonally adjusted basis, 1.3 per cent higher than the number recorded in January 2018. Additionally, HMRC reports that the start of this year […]

FCA eyes further supervision of investment consultant sector

The FCA has said it is working with the Treasury and Competition and Markets Authority on how it can gain greater powers with regard to investment consultants. The announcement comes after a recent CMA review into the sector found a “low level of engagement by some pension fund trustees in choosing and monitoring their investment […]

Pound-Sterling-GBP-Money-Currency-Andrew-Michaels-700x450.jpg

Graphic content – May; UK economic data has finally turned for the worse

In June 2016, immediately before the Brexit referendum, a curious thing happened. Despite the colossal uncertainty facing the UK, economic data actually started to come in above consensus forecasts. Citi’s economic surprise index nudged into positive territory, which meant that UK economic data had on the whole outperformed consensus forecasts over the prior three months. […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and thought leadership.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com