Why employers should help female employees look after their financial wellbeing

Article by Steve Watson, Smarterly

New Women in Finance Charter, financial wellbeingThis year’s International Women’s Day theme was ‘Each for Equal’. Obviously, this applies to all areas of life, but as we know from the media, women can often find themselves disadvantaged when it comes to money.

It’s no secret that there is still a distinct lack of equality in the workplace. With more men in positions of power than women, this inevitably means that women generally don’t have as much disposable cash as their counterparts. And if they have made it to a top position, they are likely to be faced with a gender pay gap which in 2019 was 8.9 per cent among full-time employees.

With this in mind, employers should help their female employees look after their financial wellbeing, understand saving and investing and be equipped to make more informed decisions about their finances. In fact, our recent survey showed that over 88 per cent of senior HR and benefits professionals believe it is their responsibility to provide support on all aspects of financial wellbeing, from savings, investment to retirement.

Much is made of women being risk averse in the media. The stats do seem to support this with 21% of women holding an investment versus 35% of men. Theories on the cause of this include lack of financial education and lower income to name a couple. But the good news is that when they do invest, women are saving a similar average amount to men.

But with new research showing that women still go into retirement with less income than men, what can employers do to help bridge the gap?  If your organisation is impacted by the gender pay gap, it’s unlikely that you will be able to resolve this easily. So, what other areas can you look at to help women in your organisation improve their financial status?

Our recent research found that 25% of 18-39 year olds say that affording a house is one of their biggest financial concerns. Younger female employees tend to be disadvantaged when it comes to renting and buying a house, because of lower incomes. A quarter are spending more than half of their salary on rent compared to just 17% of males in the same age bracket which inevitably impacts their ability to buy a first home.

While putting money aside for retirement is still important, many younger employees are more concerned with saving for more immediate priorities such as getting married, having a family, home improvements or simply having a pot of savings in case of emergencies.

With this in mind, many companies are now offering a workplace savings and investment initiative alongside a pension to accommodate the more immediate needs of employees. A savings vehicle such as a Lifetime ISA means that employees will also be entitled to a 25% Government bonus (up to £1k a year) on top of what they have saved. With low interest rates, there is little growth in savings accounts but with an investment ISA the savings are tax-free and there is potential to gain through capital growth and dividends. It’s a no brainer for first time buyers and younger female employees who can benefit from money that they would otherwise have not got.

It’s a sad fact that the average female pensioner is £7,000 a year worse off than male pensioners. While this is largely down to the gender pay gap, as we’ve seen, the way that women tend to invest is more risk-averse which means they are likely to be missing out on making the most of their money.

No matter what their age, how much they earn or what their priorities are, there are a number of initiatives that employers can introduce to help their employees improve their financial wellbeing.

Ultimately it all comes down to education, tools and choice:

  1. Make sure your female employees have a better understanding of saving and investing by providing access to financial advisers, in-house workshops and online education tools. Offering financial education is critical to enable them to make more informed decisions about their finances
  2. Provide accessible and easy to use tools and platforms that enable employees to save and invest. This can be done directly through payroll, much like a pension scheme, using a system that many employees will already be very familiar and comfortable with
  3. Give employees a range of options to help manage their personal finances – so that no matter what age, how much they earn or what their priorities are, you can offer a savings tool that helps improve the financial wellbeing of all your employees.

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