‘We need to redouble our efforts to close all the money gaps’

Baroness Helena Morrissey has worked in finance for more than 30 years. She is chair of AJ Bell, founded the 30% Club – fighting for greater female representation on company boards – and is the author of

AStyle And Substance.

s Beyoncé put it, ‘money gives men the power to run the show’. We’ve come a long way in narrowing the gender pay, pensions and wealth gaps over the past 100 years – but, sadly, the pandemic has taken us backwards. We need to redouble our efforts to close all the money gaps. It’s been illegal to pay men and women different salaries for the same (or equivalent) work since 1970. Two years earlier, 850 women at Ford Motor’s Dagenham plant walked out after learning that they would be paid 15% less than men. The women made car seat covers and when stock ran out as a result of their strike, car production came to a halt – prompting a rapid settlement. This inspired a national campaign and, ultimately, equal pay legislation. But while unequal pay has long been prohibited, women have typically continued to do less highly valued jobs than men. This is the gender pay gap – the difference in what men and women earn, on average. That gap has been shrinking, from 27.5% at its highest in 1997 to a low of 14.9% in 2020. But in 2021, the gap started widening again, reflecting the disproportionate impact of the pandemic on women, as they were made redundant in bigger numbers or quit to care for children, and it now stands at 15.4%.

Insisting on measurable performance objectives and pay that’s linked to achieving those is a good place to start. Over the next 10 years, we should aim to close the gender pay gap completely. Companies need to track it and, as well as recruiting women, make interventions on promotions and pay rises. The pay gap is already less than 1% for 22 to 29-year-olds, so the focus needs to be on older women. Today’s pay gap is, however, dwarfed by the pension gap. That’s the difference in female pensioners’ income compared with male pensioners, and it stands at a huge 37.9%. It’s especially problematic because it affects women at a stage in their lives when there is little they can do about it. The combination of more career breaks and the cumulative effect of years of the gender pay gap on pension savings makes for the depressing shortfall. Addressing the gender pay gap, helping more women to return to good jobs after a career break, and sharing parental leave with men are all part of the long-term solution.

The gender pay gap is dwarfed by the gender pension gap

Saving for a rainy day

While women’s lives, and their finances, have changed hugely over the past 100 years, some messages have remained constant. One that has stood the test of time is the need to have a financial buffer to guard against the unexpected, whether that’s a new boiler, illness – or a global pandemic.

Although women were able to open accounts in their own names from 1880 onwards, banks were very much a male domain. To encourage women through their doors after the First World War, they introduced home safe accounts (portable safes you put money into at home that were collected regularly by someone from your bank!) and, later, savings stamps, which were seen as a less intimidating way of saving, especially for those with only small amounts to put aside.

With more women starting to save, by the 1930s Good Housekeeping was talking to readers about practical ways they could build up a pot of readily accessible cash to dip in to if a ‘rainy day’ arrived. In an article on saving, published in 1939, we noted ‘thrift is another name for independence’, something that still rings true today, although we’re more likely to talk about building financial resilience these days.

The events of the past few years have really brought home the importance of having savings. Although women were most heavily hit financially during the pandemic, in terms of furlough and redundancy, there has been a silver lining for some. Those who managed to save put away £2,628 on average in the year after the first lockdown, although this is dwarfed by the £5,335 men saved during the same period.

Invest, invest, invest

Today, much is made of the fact that fewer women invest their savings than men (in the UK, 70% of women say they have no investments, compared with 59% of men). ‘This is often attributed to the fact that women are averse to risk,’ notes Annabelle Williams, author of Why Women Are Poorer Than Men. ‘However, if you look at men and women in a similar economic position, you find there’s no difference in appetite to invest money. The issue is that women are poorer than men; they are often acutely aware of their outgoings and, broadly speaking, they’re just not in the same financial position as men to be making investments.’

Given the gender imbalance that exists around investing today, it might come as a surprise to learn that back in the early days of Good Housekeeping, women were investing in bigger numbers than we might imagine. ‘There was a big survey of shareholders in around 1940 and it found women had nearly as many shares as men,’ says Professor Janette Rutterford. ‘Shares were perfect for women because you didn’t have to maintain them in the way you did if you invested in property. There was a big marketing campaign during the First World War to sell War Savings Certificates and experts believe this is where many women learned about investing.’

Reflecting this interest, GH regularly ran advice about investing, and, in 1924, we published a piece called ‘Women as investors’ by Helena Normanton (the first British female barrister) on the importance of seeking out guidance from a broker, rather than buying shares that sounded exciting on face value,

such as ‘companies growing pineapples in the Sahara or investing in Peruvian tin mines’. The details may have changed but the advice hasn’t – investing remains the best way to grow your money, particularly when inflation is higher than interest rates on savings.

Borrowing & property

A mortgage probably represents the largest sum we will ever borrow in our lifetimes. While women were first given equal right to inherit property in 1922 (and could own and dispose of property in the same way men could from 1926), it wasn’t until the 1970s that we could take out a mortgage to buy property in our own right without needing a male guarantor. Today, the property we own isn’t just about having a home of one’s own; it can be a source of income (women account for roughly half of all buy-to-let landlords in the UK) or an investment we can draw equity from to help fund anything from early retirement to care in later life.

Our use of credit cards may have dipped during the pandemic, when restrictions on travel and going out saw us spend less on big-ticket items such as holidays and entertainment, but today just under seven in every 10 adults in the UK has one in their wallet. However, access to credit of this type hasn’t always been as readily available to women as it has to men. Although credit cards were introduced to the UK in 1966, it was only in 1980 that a woman could apply for a credit card or a loan without a man’s signature.

Forty years on, the credit landscape is changing dramatically again. Now, credit by another name in the form of Buy Now Pay Later is readily accessible (critics would argue too readily accessible) to all, irrespective of gender, at online checkouts. Take-up has been huge, with our use of BNPL quadrupling in 2020; women – particularly younger women – are more likely to use BNPL as a line of credit than men, according to the Financial Conduct Authority (FCA). Now, the Treasury and the FCA are looking into how this type of borrowing could be better regulated to protect those who use it.

The power of a pension

When state pensions were first introduced back in 1908 (they were available for anyone over 70), two-thirds of the recipients were female because they were the ones who lived long enough to claim. Their arrival made a massive difference to poorer women, who were unlikely to have savings to live off. The arrival of the Widows Pension Act (which was paid to all widows of insured men with children under the age of 14 at the time of the husband’s death) in 1925 was a big win for women and recognised that those whose husbands had died needed extra support.

It is women who have been most affected by changes to the state pension – in 1940, the age they could claim was lowered to 60 to acknowledge that they tended to finish work younger than men, often due to poorer health. The most significant upheaval in more recent years came in 1995 (and again in 2011), when the age women could claim their state pension was raised to 65, in line with men (both have since risen to 66 and will continue to rise). Many readers, particularly those born in the 1950s who were most affected, were enraged by the way this

was handled. Broadcaster Muriel Gray wrote an impassioned cry for a rethink in GH’S June 2016 issue and we advised readers to join the WASPI (Women Against State Pension Inequality) campaign group. The High Court made the disappointing decision in 2019 that no compensation would be paid.

While there is now parity for men and women, there is still inequality in the amount they typically receive: In 2021, men claimed an average £166.34 a week, compared to women’s £160.11. This is mostly down to the fact that women are more likely to take time out of work to care for children or older relatives and don’t meet the 35-year minimum threshold of NI contributions to get a full pension.

There’s inequality, too, in private pensions: men retire with an average of £315,000 to women’s £157,900. ‘We’re facing a hidden crisis where most of the people living on their own over the age of 70 are women and the majority of them are living in poverty because they have only a fraction of the amount of money saved for retirement that men do,’ Annabelle Williams cautions.