Gina Miller became a household name for challenging the UK government over Brexit, but now the entrepreneur and activist has another big fight on her hands: to push women to invest so they can prosper and avoid being a victim of financial abuse.
Financial independence is vital for women’s safety, security and freedom, she says, as research from the wealth management company she founded, MoneyShe, shows more than 75% of women are not confident that they can afford a comfortable retirement.
The study finds that one in three women feel trapped in a relationship, or situation, due to a lack of financial independence. It is being published to coincide with the International Day for the Elimination of Violence Against Women on Monday. “Women tend to have about a third of the retirement pot that men do, which is not great when you consider they tend to outlive men,” says Miller. “The idea of so many women living their golden years in pension poverty is extremely distressing.”
The gender gap we usually think of relates to differences between the salaries paid to men and women. But there is a similar problem when it comes to investing for the future – the gender pension gap. In the UK, it averages £136,000. Women are retiring with £69,000 in pension savings on average, compared to a man’s £205,000, according to the MoneyShe report on the “wealth market” for women.
Divorce further strains financial security, with women’s income decreasing by 33% post-divorce compared to 18% for men – something even more critical with the 25% of divorces that take place after the age of 50, it says.
According to the annual Scottish Widows Women and Retirement report, there is a “very real risk that we won’t see pension parity for many generations to come”. It says the average woman is on track to only receive £12,000 of income a year in today’s money during retirement, after income tax and housing costs, compared with £17,000 for a man. This leaves them trying to live on less than the £14,400 a year “minimum” retirement income recommended for a single person by the Pensions and Lifetime Savings Association.
A number of factors underpin this, such as lower average rates of pay, but also career breaks to raise children. They may also be in a relationship where a partner is in charge of the finances.
“Financial domestic abuse is chronically unreported; it is a form of coercive control,” says Miller. “This happened to me, and it didn’t happen overnight.”
Miller wrote about her troubled second marriage – which at one point resulted in her having to sleep in her car – in her memoir Rise: Life Lessons in Speaking Out, Standing Tall and Leading the Way. “It was a series of behaviours which led me to rely on him to look after our finances,” she explains. “It left me vulnerable. When I left, I left with nothing to get out.”
Relationships aside, a failure to engage with the financial world can in itself be risky. During periods when savings interest rates are lower than inflation, holding spare cash – whether in a current or savings account – means it could lose value in real terms.
“Women are saving more: the problem is they are saving in cash,” says Miller. “You want the £1,000 today to be worth the same when you retire in 25 years. No other asset class, be it property, gold or cash, will get you there. Only stocks and shares will.”
There is an old saying in financial circles that women save and men invest, and this continues to ring true.
Of the women actively managing their money, the largest proportion used a regular savings account (61%) and one in three (35%) invested in cash Isas, according to research earlier this year by Aviva.
It also found that just over one in six (17%) women held a stocks and shares Isa, compared with 30% of men. There was the same imbalance when it came to a self-invested personal pension (Sipp), with men at 19% and women 8%.
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The same research found 37% of women did not invest, versus 24% of men. Almost one in five women (18%) thought the risk was too high, while 10% said it was too complicated, with 6% saying they “don’t know where to start”. Given the potential that investments have to grow over the long term, women risk “missing out”, says Sarah Coles, head of personal finance at Hargreaves Lansdown.
HMRC statistics show the higher your income, the more likely you are to have a stocks and shares Isa.
Women favour cash for several reasons. “Those on lower incomes tend to be busy building an emergency fund instead, so the gender pay gap plays a part here,” says Coles. And Miller says her research, and anecdotes from clients, indicates women believe investing is a man’s world – a view underlined by the fact that the wealth management industry itself is still male dominated.
As a mother of two daughters, Miller is also worried that young women are bombarded on social media with retrograde ideas about what it is to be a “real” woman, as well as facing rising levels of misogyny.
“Teenage girls are targeted by this idea that they mustn’t be independent,” she says. “My experience of financial domestic abuse was 18 years ago, but it’s terrifying to see what’s happening.” Even if you are in a successful partnership, financial independence is not just for the “bad days”, she says: “Think of it as your freedom fund.”
If you want to know where to start, Coles suggests regular payments into a stocks and shares Isa, perhaps opting for a broad multi-asset fund or global tracker. “If you start with relatively low stakes, it can feel easier to tackle,” she says.
Investing doesn’t have to become your hobby, Coles says: “Just make sure you check in once a month, read one article about investing, watch one video, or put a podcast on in the background.”
Coles describes herself as a “survivor of economic abuse”, which cemented her belief in having “agency” when it comes to money. “That means having savings, investments and pensions in your own name, and feeling a connection and engagement with it,” she says.
“It makes perfect sense for couples to plan their finances together, but it’s vital not to fall into the habit of one of you looking after a single area of your finances. All relationships will eventually end – either in a split, or in death – and both are terrible times to have to get to grips with your finances from scratch.”