Securing a fairer financial future

With the financial consequences of Covid-19 set to hit women hardest, Emma Ann Hughes analyses a new report on the matter from the IWF initiative

The Insuring Women’s Futures (IWF) manifesto, which we launched in November 2019, outlined some of the issues faced by women in their gender pay gap penalty and prompted the profession to commit to a variety of initiatives to tackle this head on.

While the profession’s commitment to the IWF flexible working and inclusive customer financial lives pledge will result in female financial resilience improving in the years to come, sadly Covid-19 means the wealth gap between the sexes has worsened in the last 12 months.

IWF have now produced a new report that lays bare the impact that the pandemic has had on females’ finances and details new steps that should be taken to prevent coronavirus delaying the closure of the gender pay gap until 2110 and, therefore, the gender pension gap to 2160.

Before lockdown, the gender pay gap was expected to close in 2050 in the UK, meaning that women were set to reach pension parity in 2100.

The latest IWF report, published in November 2020, points to several studies that show how women have been hardest hit financially by coronavirus.

A poll of 3,280 people in June by the Fawcett Society showed 37% of white women and 43% of black, Asian and ethnic minority women have seen their levels of debt increase due to Covid-19, compared with only 
34% of white men.

As well as taking on more debt than men during lockdown, the same Fawcett Society’s research showed women’s earnings plummeted more than men’s during to the pandemic.

Separate research carried out by the Learning and Work Institute, commissioned by the Centre for Ageing Better, showed one in six older women now work in sectors that have largely or entirely shut down due to the economic fallout of the pandemic.

There is an even more urgent need now to equip girls and women of all ages and in all situations for a resilient and secure financial life

Their research highlighted that only one in 10 men were working in sectors that were forced to close. Several studies have shown the most common cause of female finances and earnings being hardest hit by the pandemic was due to them taking on additional caring responsibilities that threaten their careers.

While 81% of employed mothers need childcare to be able to work, 51% of 19,950 women polled by Pregnant Then Screwed said they no longer had the necessary provisions in place to allow them to earn money as a result of Covid-19.

The online poll, conducted by the maternal rights group in July 2020, showed nearly two thirds of those furloughed (65%) said lack of childcare was the reason behind it plus almost half (46%) of those made redundant felt lack of childcare played a role in the decision.

Jane Portas, author of the original manifesto, the latest report and co-founder of IWF alongside the Chartered Insurance Institute (CII), says it is clear that if action is not taken now, generations of girls and women’s financial security is at risk; and this will affect everyone. 

She says: “The pandemic has accentuated the close interdependencies between financial and healthy wellbeing. Simultaneously, it has pointed to the fragility of many of the foundations underpinning women’s economic progress, highlighting how women with different ethnicities, circumstances and life journeys are affected. There is an even more urgent need now to equip girls and women of all ages and in all situations for a resilient and secure financial life. 

“Firstly, to recover from Covid-19 financial shocks and regain their financial standing and then to work towards more balanced financial wellbeing and financial security for 
the long term.”

Building back better

The latest IWF report makes clear the devastating impact coronavirus has had on female fortunes and explains how policymakers, businesses, society, as well as the insurance and financial services profession, can act now to not only reverse the damage caused by the pandemic on women’s financial resilience but to go further and build back a financially fairer society for all.

Key ‘pandemic priority’ recommendations made by the report include:

1) Government should establish ways to support women at critical academic and career pathways to gain skills that will enable them to obtain financially rewarding jobs.

2) Financial guidance and advice should be available in the workplace to ensure women whose pensions have been depleted by Covid-19 can get their savings pots back on track.

3) Employers should commit to flexible working and sign up to IWF’s Financial Flexible Working Pledge. Employers should help staff consider and address theimpacts of the pandemic on their own and their families’ financial and wider wellbeing.

4) Financial services providers and financial advisers should support the IWF Inclusive Customer Financial Lives Pledge and help women address the financial risks created by the pandemic.

Sian Fisher, CEO of the CII and co-founder of IWF, says that vital action needs to be taken to address the immediate Covid-19 financial threats being faced by women now.

She says: “The coronavirus pandemic has reminded us of the importance of paying attention to, and managing, our financial and wider wellbeing.

“The profession and government must unite to explore how we can rebuild our collective financial wellbeing with better balance.” ●
 
Emma Ann Hughes is director of communications of the PFS 

Image Credit: iStock

There is an even more urgent need now to equip girls and women of all ages and in all situations for a resilient and secure financial life