A lifetime of financial inequality

University of Sussex researchers – who surveyed more than 2,000 parents in March – recently raised fears that the coronavirus had caused women to “regress to a 1950s way of living” that will have “serious consequences” in the future.

The university’s data showed 45 per cent of mothers have been responsible for the bulk of childcare during the outbreak – up from 27 per cent before Covid-19 – and as a result the gender pay gap is “widening even further”.

The university’s research showed seven out of 10 women are now completely or mainly responsible for home schooling.

The research exposes the devastating impact the coronavirus is having on women.

Key Points

• Women are reverting to a less financially stable way of life following Covid-19
• The insurance industry has committed to highlight women’s financial inequality
• The CII is looking at the conversations people need to have with their family

Coronavirus is widening the financial inequality that exists between men and women, but it is important we recognise a comparison with the way women lived in the 1950s does not expose the depth of the current problem.

Last year, Insuring Women’s Futures, the first stage of the Insuring Futures programme established and led by the Chartered Insurance Institute, noted the way we work, love, live and age has changed dramatically since the 1950s.

Unlike my maternal grandmother, who stayed at home to raise three children while my grandfather worked, I went to university, edited FTAdviser and Financial Adviser for many years, had two children and am now communications director of the Chartered Insurance Institute and Personal Finance Society.

I have had career and work/life opportunities that my grandmother’s generation would not have imagined to be possible.

However, with those opportunities has come the withdrawal of financial protections afforded to my grandmother’s generation.

Being part of a secure marriage and family unit, backed up by social care, was no longer the norm even before the coronavirus pandemic.

My generation – and my daughter’s generation – were already on course to be more financially independent but also less financially resilient than my grandmother’s and mother’s generation before coronavirus hit.

Insuring Women’s Futures concluded this meant the fundamental infrastructure to enable women to transition from the 1950s to the modern day, and to financially succeed in the future, were simply not in place before the coronavirus pandemic.

Coronavirus has further weakened some of the already fragile infrastructure that allowed women to work towards achieving their own financial independence and improving their resilience.

As Ali Lacey, one of the University of Sussex’s researchers, pointed out during the coronavirus pandemic: “We hear about women waking at 5am, working until 9am, then taking on childcare and home learning and doing more work in the evening.”

As a result of Covid-19, many women had to reduce hours or even quit their jobs in order to care for shielding parents or home school their children as the government’s advice to stay at home, protect the NHS and save lives resulted in schools shutting their doors to most children and childcare disappearing in the blink of an eye.

Data collected by Insuring Women’s Futures before Covid-19 showed career breaks and part-time work reduce women’s prospects of getting a promotion, their hourly pay and ultimately, their lifetime earnings, depleting how much is saved into a pension to pay for their own later-life care.

Next steps

Last November, hundreds of insurance and personal finance professionals gathered in London to commit to take action to raise awareness of the issues that cause women to be worse off than men and to tackle this inequality.

As a first step on the road to improved financial equality for women, a total of 21 insurance companies signed up to the Insuring Women’s Futures flexible working and inclusive customer financial lives pledge.

The ‘Financial Flexible Working’ pledge committed companies to help their colleagues to understand and manage the long-term financial implications of flexible working. 

The ‘Inclusive Customer Financial Lives’ pledge committed the same companies to adopt an inclusive ‘whole customer’ approach, encouraging women to consider the impact of their life circumstances on their financial resilience.

Insurance and personal finance professionals also united behind Insuring Women’s Futures, recommending the government and employers act to:

• Equip young women to make financially informed study choices.
• Include the employer’s pension contribution in gender pay gap reporting.
• Collect and use gender disaggregated data to inform policy and supervision.
• Extend auto-enrolment to employees on low pay in order to give all women the best opportunity possible to receive the pension tax relief that they are due.

In June, CII chief executive Sian Fisher signed The Telegraph’s letter urging the government to close the lockdown gender gap and commit to considering the impact of pandemic policy on women’s lives.

The letter – also signed by Mary Portas, Dame Helena Morrissey and Baroness Ros Altmann – raised concerns that the long-term impact of the government’s response to the pandemic on women’s lives is being overlooked.

The CII is also taking further action to gain even greater understanding of the deep-rooted nature of female financial inequality and how best the insurance and personal finance profession can address it.

Financial resilience

The next stage of the CII’s Insuring Futures initiative will examine how everyone can better build and maintain financial resilience for later life.

The CII wants to hear from anyone working in insurance and personal finance who can help identify what people can do during every decade of their adult lives to build and maintain their independence.

This stage will look at the kind of conversations people need to have with their families, friends, insurance professionals and financial advisers to create more financial resilience throughout their entire life.

The insights will form the basis of a conversation with insurers, advisers, charities, policymakers and researchers that will lead to guidance and support for professionals around: 

• How we design products and communications for older people that resonate with the way they live their lives.
• How professionals can structure conversations with clients that are more relevant to the risks and aims they have.
• How advisers can give advice to their clients’ whole family as they grow older and their plans become more entwined with the needs of their family.

Anyone wishing to be part of the Insuring Futures working group should email Sophia Kleanthous, campaigns adviser at the CII – sophia.kleanthos@cii.co.uk.

We hope many of you will add your voices and insights to assist us with this vital work.

Because while the coronavirus has highlighted existing inequalities, it has also created an opportunity for us to change the way we work and live our lives in the future.

People should be valued for their caring natures and the value this brings to society.

It is not right that a lifetime of caring can cause an individual to not have enough cash to pay for their own care in later life, so we hope you will work with us to ensure that is no longer the case in the future.

Emma Hughes is communications director of the Chartered Insurance Institute and the Personal Finance Society