The Equal Pay Act of 1970 made it illegal to pay men and women differently for the same work. Unfortunately 48 years later, the gender pay gap still exists.
If you need cold hard evidence, the Office for National Statistics has data going back more than 20 years showing the gap between what men and women are paid.
How can there still be a gender pay gap when it’s illegal?
Despite great inroads made in terms of gender equality, women are still the primary caregivers – they’re more than likely to be the ones opting out of work to look after an ill or elderly relative or to raise a family. This often means that at the time when most men are getting promoted and enjoying pay rises, women may find their careers ground to a stuttering halt.
This not only impacts their earnings potential, but their potential to invest. Here’s the rub: while we’re all fixated on the unfairness of the gender pay gap, we’re probably not thinking as much about the long-term implications all this has on our personal finances.
If you earn less, basic maths means you will have less to invest. And if you have less money, you’re probably less likely to want to take any risks with that money, which could go some way in explaining why women are still more cautious than men when it comes to investing.
The statistics back this up. While women hold more Isas overall than men according to HM Revenue & Customs figures, meaning we’re arguably more diligent savers, we hold far more cash Isas while men take the plunge and opt for a stocks and shares Isa.
Granted, the stockmarket is a more risky option than cash, but it is a well-established fact that over the long term shares markedly outperform cash.
Women risk falling into a glaring ‘investment gap’ by leaving their money in cash and steering clear of the stockmarket. But that’s not the only personal finance gap we need to be wary of.
There’s also a glaring gender pensions gap. Research from pensions consultancy Mercer has shown that while the gender pay gap stands at around 16 per cent in the European Union, its knock-on effect on women’s pension savings over time means the gender pension gap stands at more than double this.
If you needed another stat to put this into context, here’s one from the Pensions Policy Institute:
Some 76 per cent of women in the UK over the age of 60 are either single, widowed or divorced when they die. This means the ability of women to accumulate a pension for their later life is crucial to their wellbeing.
As individuals, women might not have much control over things like the gender pay gap, and neither gender can always control whether they get that pay rise or promotion. But we do have control over our personal finances. That’s why Fidelity International launched the GET INvested campaign – you can read more on this here
It’s about getting the other 50 per cent of the population to harness their financial power through investing. They may be breadwinners or homemakers, or the ones caring for sick and elderly relatives. They may also be the ones managing the family purse strings, as well as those teaching the next generation about money.