It is clear that the pandemic is more than just a health crisis, but an economic one too. Since the lockdown was introduced in March, millions of people have been furloughed or made redundant. And not only is the financial fallout of coronavirus affecting women more severely than men, it will continue to impact their savings for years to come.
Prior to the virus, women only saved a third of the amount that men do by the time they reached retirement. This is primarily because of the time taken out of their careers to have children and pay inequality. In 2019, women in their 60s had an average of £51,100 ($67,415) in their private pension pots while men had £156,500, according to the Pensions Policy Institute.
The coronavirus pandemic is likely to exacerbate the gender savings gap even further, research by Aegon has found — with a greater proportion of women saying they will decrease pension contributions in the next six months.
Women are more likely to stop contributions and less likely to use any fall in markets to invest more, the study found, both of which could widen rather than reduce the pension gap between men and women. In total, 15% of women said they were likely to decrease pension contributions in the next six months, compared to 10% of men. This is, in part, due to the financial challenges COVID-19 has brought for women.
“There’s no doubt that a lot of people, men and women, will have been adversely affected by COVID-19, although the impact on women’s finances could arguably be worse,” says Alan Chan, a chartered financial planner and director at IFS Wealth & Pensions.
Research by the Institute for Fiscal Studies found women were a third more likely to work in a sector that was shut down during the lockdown than men. One in six female employees were in such sectors, compared with one in seven men.
Women are also more likely to work in low-paid sectors such as care and leisure — sectors hit hard by the crisis. According to the IFS data, low earners are seven times as likely as high earners to have worked in a sector that is now shut.
The lockdown also left many working parents with little choice but to take time off or to try to work from home while caring for their kids. Without nurseries, professional childcare and family support networks, ONS data has shown women have borne the brunt of childcare responsibilities, household chores and homeschooling.
“Women traditionally had the lion share of home responsibilities and so their career history is already quite patchy, and the recent pandemic just compounds the problem further,” he adds.
“Now that there are a lot of people looking for work, and even more when the furlough scheme comes to an end, it could adversely impact on the job prospects for women.”
This could have a knock-on effect on women’s pensions as they will not be part of an employer pension scheme and benefit from automatic enrolment. “Pensions, just like any form of savings, will be left on the backburner when people are going through financial difficulty and struggling to even put food on the table for their family,” Chan says.
Samantha Secomb, a chartered financial planner and the director of Pentins Financial Planners and Women's Wealth, says relationship issues caused by the mass shutdown can also contribute to savings problems too.
“We are also hearing about an increase in relationship problems resulting from living in close quarters with spouses in lockdown, furloughed or working from home, and trying to home educate and parent children,” she explains.
“Statistically, women are vulnerable when relationships break down typically losing entitlement to assets intended to support later life, having greater carer responsibilities and less support to maintain a career.”
So what needs to be done to address the problem? Firstly, pension legislation and auto-enrolment need to be more inclusive and flexible.
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“There needs to be change on many levels to help close the pension gap for women — societal, cultural, policy and legislation as well as individual personal responsibility. Coronavirus will have exacerbated an existing vulnerability for women in all these areas,” Secomb adds.
“Society needs to support change that enables families to work flexibly to earn and raise families — let's celebrate Dads’ efforts more and make it more attractive to be a Dad carer as well as revere our mums whether they manage a home or a hedge fund.”