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Today was International Women’s Day – the annual global commemoration of the cultural, political, social and economic achievements of women, and, a day of focus on gender equality, reproductive rights and violence against women.

Investment & Retirement Solutions is proud to be an inclusive firm; we’re not perfect, but we strive to ensure our team and our clients are treated equally, irrespective of the ‘labels’ society appends to all of us.

Having seen today’s airing Oprah’s Megxit Interview with Meghan and Harry we’re acutely aware of how context is everything and how anyone can choose to take offence if they want, so we’re skating on thin ice here with deliberate gender and age biases, but hopefully, you, our reader, will appreciate our noble intentions:

Things our daughters need to know: about personal finance

Of four girls born in the UK today, at least one of them will celebrate their 100th birthday, and demographic forecasts suggest it’s likely at least two of them will celebrate their 100th birthday. In the area of longevity, the gender gap is almost closed; of four boys born in the UK today, there is no significant divergence between the length of their lives with the lives of their sisters. Well done boys and girls!

However, as we are reminded in International Women’s Day, despite much progress closing the gender gap with equal rights in society and the workplace, the gender gap of our financial situations and our caring responsibilities remain stubbornly difficult to close. As financial planners, we see every day how the cost of caring responsibilities manifests in an individual’s financial situation.

Economists describe the value of a service or benefit in kind provided by an employer, government or individual within a household as “inputted income” (Jenkins and O’Leary, 1996). We rarely see the value of this inputted income reflected in the financial standing of our clients who provide family care, predominantly women. In defence of modern man, Lewis (2001) noted that the UK traditional model of a male breadwinner and female carer never applied to all households and that the share of unpaid caring provided by ‘modern man’ is much greater than that provided by his father.

Grimshaw and Rubery (2015) update the traditional model as “one-and-a-half breadwinner” in which one partner (usually male) works full time, and the other (usually female) is doing part-time paid work and part-time unpaid work (caring and domestic responsibilities).

To compound matters for our daughters, the OECD (2010) identified that part-time paid workers suffer a ‘part-time pay penalty’ as the difference between the reward we enjoy for doing similar (or the same) work for full-time and part-time disproportionately rewards the full-time worker at the expense of the part-time worker.

Costa Dias et al (2018) have produced UK specific research showing that the part-time-pay-penalty is 10% of income around the birth of a first child, rising to 30% by the time of the first child’s 12th birthday. At that child’s 12th birthday, 2/3rds of the part-time-pay-penalty can be directly attributed to the part-time worker (usually a woman) having missed out on training and experiences which reduce the value of their human capital in our labour market.

So how does the gender gap manifest in personal finance?

  • Our daughters can expect a pension pot which is likely to be only 1/5th of the size of our sons’ pension pots
  • Our daughters can expect to not receive a full flat-rate state pension, but our sons can expect to receive a full flat-rate state pension.
  • The combined pension deficit is likely to see our daughters receive £8,500 less than our sons during each year of their retirement (unindexed, today’s values)
  • Our daughters are likely to accumulate only half of the savings (cash) and investments which our sons will accumulate.
  • If our daughter is within the bottom 40% of income-earning households it is unlikely that she will have any significant pension or cash when she starts her retirement.


How do we improve our daughter’s financial outcomes?

As financial planners, we will not enter the debate about caring responsibilities and choices, but we can comment on some actions which help mitigate the financial impact of caring responsibilities:


Qualifications: Portas (2021) notes that women “earn 60 per cent of what men earn throughout our lives, and one of the drivers of that is women’s lack of technology skills,” Much of this human capital deficit is established in early life – which subjects are being picked at GCSE level influences the subjects which can be studied at A level. A levels are the door openers and door closers for the degree and ultimately the career choices are daughters will have.

  • The terrifying reality is that choices made at 13 are likely to impact on your daughter’s future financial well-being, so try to help them make ‘wise’ choices.


Don’t put off until tomorrow what you can do today

Most of us have a realistic understanding that despite best intentions tomorrow never comes, so what can we do today to improve our daughter’s outcomes?

  • For under 18s we can fund pensions and junior Individual Savings Accounts for our (grand)children, giving a well-needed kickstart
  • Discuss with your financial planner how gifting can be used to decrease potential inheritance tax bills and put more money in your daughter’s control.
  • Start them early: Paul C mentioned to us how proud he was that when his daughter got her first proper job at age 20, that she immediately arranged for 10% of her pay to be invested in the employer’s pension scheme, with employer matching she’s investing almost 20% of her salary without any notion of sacrifice and significantly stacking the odds in her favour for later life.


Careless Cohabitation

Cohabiting women (about 18% of UK couples cohabit) lack the same legal rights as those who are married or in a civil partnership. Relate note that break-up rates among cohabiting couples are considerably higher than those of married couples and that 27 per cent of cohabiting couples will have separated by the time their first child is five, compared with a much more modest 9 per cent of married couples.

  • Cohabiting couples can protect each other’s financial interests with a “living together” agreement, a type of pre-prenuptial agreement which any half-decent family law practitioner can draft.
  • Cohabiting couples should write wills to ensure each other can benefit from the estate should one die during their relationship.
  • Keep your savings and investments separate and make sure household income is shared (to fund the savings and investments) fairly.
  • Fund a pension (and leave the death benefits to the remaining partner, you can always change this if you split up)


Beware of false guarantees:

Marriage and civil partnership can provide some financial security. After all, there are significant tax benefits relating to inheritance and capital gains, and you have pension and Isa rights too, but marriage can also leaving you holding the financial baby in one arm whilst you hold the real baby in the other.

  • When there are no obvious benefits to pooling savings and investments, keep them separate and funded fairly from the pooled household income.
  • Keep your pension going!
  • Claim State Pension Credits by completing Child Benefit forms
  • Women tend to make more prudent financial decisions than men, so get involved. Understand what money arrives in the household and where it’s going when it leaves the household. Engage in personal finance decisions.
  • Married to a money-making machine? If so insure it against the risk of it breaking temporarily or permanently.


Has anyone ever had a good divorce?

With about 40% of UK marriages ending in divorce, we’ve heard – “only the lawyers did well from my divorce” many, many times, but that needn’t be the case.

  • Be sensible and objective (difficult with raging emotions) when looking at how the matrimonial estate should be divided.
  • Listen to your lawyer’s counsel (and yes you can afford the lawyer because you can’t afford to not have the lawyer).
  • Don’t destroy yourself running up a £1000 bill to argue over something worth £100
  • Get your independent financial adviser involved to decipher the financial aspects, for example, the law requires the value of all pensions to be taken into account in a divorce, but in 70% of “agreements”, they’re excluded, often because solicitors don’t understand the true value of pensions. They can be worth more than your home and are a great bargaining chip.


Take a risk?

We know women generally have a lower risk appetite than men, but do we know what “risk” means? Do we understand the “risk” of inflation constantly destroying the buying power of the cash which is on deposit and earning interest so that your cash ISA is likely to deliver negative real returns?

Our financial planners talk about the two risk levers: 1) time – how long is it until you need to access all of one of your pots? And 2) diversification – our financial planners use all sorts of complex modelling tools, but grannie’s adage makes more sense “don’t put all your eggs in one basket”

For the last 65 years, Barclays have published an annual Equity and Gilt study, analysing UK and US returns for the last 114 years. Time and time again, this highly credible academic research proves that time and diversification reduce risk and that ‘investing’ is the only way to achieve long term growth in buying power.


Secure their financial future

We hope this brief overview of a complex and multifaceted subject is useful.

Our key messages are:

  • Statistically, our daughters will not enjoy the same financial security as our sons
  • We can influence our daughters’ financial futures for the better if we want.


Wealth warnings:

Our regulatory warnings are shown below this article.



The Personal Finance Society has recently published “Living a financial resilient life in the UK beyond COVID-19” – targeted specifically at women, it’s a good read and we’re happy to make it available, with no strings attached HERE



Costa Dias, M., Joyce, R. and Parodi, F. (2018) Wage Progression and the Gender Wage Gap: The Causal Impact of Hours of Work, Institute for Fiscal Studies, briefing note, no. BN223, London, IFS.

Grimshaw, D. and Rubery, J. (2015) The Motherhood Pay Gap: A Review of the Issues, Theory and International Evidence, ILO working paper, no, 1, Geneva [Online]. Available at (Accessed 8 March 2021)

Jenkins, S. and O’Leary, N. (1996) ‘Household income plus household production: the distribution of extended capital income in the UK’, Review of Income and Wealth, vold.42, no. 4, pp. 401-419.

Lewis, J. (2001) “The decline of the male breadwinner model: the implications for work and care”, Social Politics, vol. 8, no. 2, pp. 152-170

Organisation for Economic Co-operation and Development (OECD) (2010) ‘Chapter 4: How good is part-time work, OECD Employment Outlook 2010Moving Beyond the Jobs Crisis [Online] Paris, OECD, pp. 216–62. Available at (Accessed 8 March 2021)

Portas, J. (2021), Living a financially resilient life in the UK, [Online]. Available at, (Accessed 8 March 2021)


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