All the statistics show that women are saving less than men. So, what can employers do to help? And how can financial wellness strategies be improved to better serve women’s needs? Sara Benwell explores
Seemingly never-ending research studies show that women are consistently saving less than men, whether it’s a building a rainy-day fund, investing our spare cash, or making sure we have enough to retire on.
Partly, this down to differences in earning patterns. As far more women work part time, often because they have to care for children or relatives, they have less disposable income to save or invest.
And even when women are working full time, the gender pay gap shows we frequently earn less than our male counterparts for doing exactly the same job.
Riaan van Wyk, workplace wellbeing consultant at Barnett Waddingham, says: “The historical distribution of earnings across genders means that women in vulnerable groups and ethnic minorities are more likely to face savings barriers such as the gender pay gap, financial exclusion, taking time out to raise families and variable earnings patterns.”
Darren Laverty, partner at the employee benefits specialist Secondsight, adds: “There are factors that can add to the difficulty of saving, such as a higher proportion of women working part time, or that women also tend to shoulder the burden of family care, whether that be for children or elders – creating breaks in employment.”
However, the disparity in financial security cannot be attributed to different earnings levels alone. Even when women do earn the same (or even more) than men, they are still less likely to save or invest.
This is particularly true for pensions. Hannah Dolding, senior employee benefits consultant at Mattioli Woods, says: “While automatic enrolment statistics from the Department for Work and Pensions show a significant rise – from 40% in 2012 to 73% in 2016 – there is still a substantial gap in ‘value’, as women generally end up with smaller ‘pots’ than men.”
Whether women are unable or unwilling to save, the result is the same. Far too many women find themselves in a precarious financial situation. This predicament is exacerbated by the rising number of divorces among those over 50. Many women who were planning a financial future as part of a couple are faced with something quite different.
For employers, this is problematic. It’s not just that making sure your employees are financially stable is the right thing to do – money worries can also lead to poor mental and physical health, which in turn has an impact on a person’s ability to carry out their job effectively.
Why wellness strategies are not solving the problem
Financial wellness programmes can help employees to plan and are becoming more commonplace in the workplace. However, there are problems that need to be addressed.
Van Wyk says: “Current financial wellbeing strategies are not doing enough to attract employees, irrespective of gender. This is evidenced by increasing levels of over indebtedness and shortfalls in pension savings.”
Fortunately, programmes are becoming more sophisticated and there is substantial evidence that targeted communications can be particularly effective. But while companies are having a great deal of success segregating messages based on life stages – for instance when people are about to retire, or when women go on maternity leave – very few have implemented plans that tailor communications according to gender.
Jeanette Makings, head of financial education at Close Brothers, says: “While employers and financial educators are well placed to encourage women to save more… few have targeted strategies for women within their financial wellbeing programmes.
“Around half of UK employers already provide financial education, and one in five aim to launch financial education initiatives for their staff in the next 12 months.
“But this education is not offered to everyone and much of it is not targeted to supporting specific employee groups. Less than half of those employers that offer financial education tailor the programmes by career stage or salary level, and are not focused on the specific needs of women.”
The benefits of targeted communications
Given the imbalance between the genders, employers who have, or are considering, financial wellness plans should consider using tailored strategies when communicating with female staff. This is doubly true if your organisation has many women working part time, or in low-salaried roles.
Makings explains: “These [tactics] can include simple things such as reviewing communications and adjusting messages and delivery methods to include part-time workers better, providing information packs before maternity leave explaining the financial impact of the career break, and developing education targeted at planning for the financial impact of maternity leave and part-time working.”
However, when segregating communications, it’s critical to get the messaging right. Female targeted plans that miss the mark will at best be poorly thought-out and at worst condescending and likely to do more harm than good.
Anne McClean, senior financial planner at Charles Stanley, says: “There are some common misconceptions about women and saving that create barriers: that women are not interested, that conceptually it’s beyond their pretty little heads, that women are overly emotional, or they are super-cautious…
“These misconceptions, coupled with the way that saving are sometimes presented, can be off-putting.”
Consider life stages
In an ideal world, targeted solutions would go further than to simply look at gender. HR and reward directors should make use of the data that’s available via payroll, pension providers and benefits platforms to establish which employees are most at risk. They can then target their communications to encourage these staff to use the benefits, tools and education that is already on offer.
While segregating by life stage can (and should) be used in a variety of life stages, it is crucial for pensions communications.
McClean explains: “It’s easy for all employees to anchor on to the perception that a random percentage being paid into their pension fund, set by their employer, means they are fine – even though it’s not linked to individual needs in any way. Anything that can be done to dispel this myth is welcome.”
To achieve this, employers should look for opportunities to reconnect employees with their pension savings such as salary increases, bonus payments, maturity of share save schemes and when benefits statements are issued.
Improving financial education
Once your communications strategy is fit for purpose, it’s worth reviewing any financial education materials or platforms you have. Good financial education programmes will benefit your workforce generally, but it could have a disproportionately positive impact on women, according to Laverty.
He explains: “Research [from the Organisation for Economic Co-operation and Development] shows that financial literacy among women is lower than for men. Therefore, by ensuring individuals, including women, receive well-delivered financial education, we should see women’s savings rates increase over time.”
A thorough review may indicate that you either need to add new materials, or that your existing education needs an update. Surveys can be an excellent way of reviewing how your staff view their finances and whether they find your current programme helpful.
McClean says: “Programmes to improve financial literacy are a good start. Employers need to engage with women. Keep testing and asking for feedback to see what’s effective.”
Offering financial advice
Education is all well and good, but companies that really want to make a difference should be pointing their staff in the direction of financial advice. If budget allows, providing access to an adviser could go a long way towards improving women’s financial wellbeing.
Van Wyk says: “One positive aspect highlighted in much of industry research is that women are more inclined to seek financial advice than men. This naturally makes women an ‘easier’ audience to reach, provided employers have the right interventions and platforms in place.”
Makings adds: “The delivery of the education is a vital component in its effectiveness. Online education may be a part of the delivery system, but it should not be the whole solution.
“Everyone prefers face to face but this is also the most effective; all workers prefer it but women express an even higher preference… If there are particular employee groups (including women) who need more help then consider providing one-to-one help via guidance clinics, a helpline and access to advice.”
Deal with the gender pay gap
Of course, the best financial wellness programme in the world can only do so much. Any company that is serious about improving the gender situation must look at pay. As long as women are under reimbursed for the same roles as men, the disparity in financial security will continue. Quite simply, if women earn less, they will save less and invest less.
Any company with more than 250 employees must report on their gender pay gap by 6 April, but any organisation that cares about women must make equal pay a priority, whether they’re required to report on it or not.