Boring Money warns of gender investment gap

Victoria McKeever writes

While the gender pay gap has been in the news, a similar problem – the gender investment gap – has been largely ignored, threatening to exacerbate the problem, Boring Money founder Holly Mackay has warned.

Mackay (pictured) said together the two issues presented a “huge problem” for women, warning that failure to engage women as long-term investors exacerbated a ‘key problem’ for society.

“Our research identifies a sinister ugly sister to the gender pay gap, that is the gender investment gap,” she said. “The combination of these two highlights a huge problem for women when it comes to future wealth and retirement funding.”

Mackay explained that typically women are less likely to invest than men, sticking to cash because of “mistrust, a greater fear of investment risk and the time pressures of day to day life”.

A mere 12% of women hold a stocks and shares ISA, compared to almost a fifth (19%) of men, according to research from Boring Money.

“Not only are we earning less, but any savings are more likely to sit in cash, which does guarantee one thing – over the long-term, our money is not working as hard for us as it could be,” she said.

Mackay pointed out that over any ten year period since the stock market began, stocks have done better than cash nine times out of 10, meaning women have continued to miss out on these returns.

“We need to make investing more inclusive, or attempts to deliver equality in later life will fall short. This is a bigger issue than simply looking at the pay gap,” she said.

Equal Pay Day

To mark Equal Pay Day on 10 November – the day in the year when women start to work ‘for free’ – campaign group the Fawcett Society released research indicating that it would take 100 years to close the gender pay gap at the current rate.

The pay gap has stood at 14.1% since 2015, meaning it would not reach 0% until 2117 if it continued to close at the same rate as over the past five years, it said.

While the gap is wider for women in their 50s, at almost a fifth (18.6%), it has in fact grown among women in their twenties too – from 1.1% in 2011 to 5.5% in 2017.

Chief executive Sam Smethers said: “The pay gap is widest for older women as it grows over our working lives but we are now seeing a widening of the pay gap for younger women too, which suggests we are going backwards and that is extremely worrying.”

Exclusion from workplace pensions

What’s more, more than three-quarters (77%) of employees earning less than the £10,000 per annum auto-enrolment trigger are believed to be women, according to a report from the Pensions Policy Institute commissioned by NOW: Pensions.

This is due to the higher percentage of female part-time workers and women in lower paid jobs.

Of those women that are saving into a workplace pension, almost half are using auto-enrolment as their only form of saving for retirement, resulting in women expecting a mere £102,000 in their pension pot compared with £184,000 for men.

NOW: Pensions communications director Amy Mankelow said: “The gender pay gap not only impacts the quality of women’s lives day to day but has profound consequences for their future.

“With the state pension slipping further from reach it is vital that auto enrolment works equally for both women and men and removing the auto enrolment trigger and earnings bands is imperative to ensure that this discrimination does not become embedded in our pension system.”