Mehareen AliIn the realm of retirement planning, a significant gender gap persists, casting a shadow over the long-term financial security of women. In this article, Mehareen Ali, Senior Wealth Planner at SG Kleinwort Hambros helps us to understand and address these barriers to further close the pension gap.

Ask anyone what the impact of the COVID-19 pandemic had on employees and the foremost response would be around working patterns and the surge in hybrid working. A lesser known but arguably greater effect has been the impact on the gender pay gap. The gender pay gap among all employees decreased after the pandemic from 17.4% in 2019 to 14.3% in 20231.

Whilst this signals a positive move in the right direction, the pay gap is only one piece of the puzzle in terms of measuring the true discrepancy between men and women in respect to finances. In March 2023, 59% of women compared to 66% of men were saving into a pension2.

Although the report cited the main reason for this pension contribution gap to be due to the aforementioned gender pay gap, there are also other factors to consider. For example, whilst it is widely accepted that women are more likely to save than men, it is also known that women are less likely to invest than men. Yet, arguably, women have a greater need to invest than men considering research from Royal London found that 29% of women surveyed stated the state pension will be their only source of income in retirement compared to 13% of men3.  

In order to encourage this though, we first need to examine what the barriers are. For example, why exactly are women more risk averse when it comes to investing? The University of Bath published research entitled “Gender differences in optimism, loss aversion and attitudes toward risk” where they concluded that women are less willing to take risks than men because they are more sensitive to the pain of any losses, they might incur than any gains they might make4. Interestingly, the report goes on to say that men could learn to be more circumspect in respect to risk since their optimism may be linked to overconfidence about their abilities. So, what is the best way to strike the correct balance?

If a key concern for women investing is due to loss aversion, then it is important that any investment strategy is mindful of this concern.

Hydi Yip, Senior Private Banker, lead on Female Entrepreneur Clients, at SG Kleinwort Hambros says: “There is a lot of work needs to be done to close the pension gap. Women often seen as risk averse, but I think we are risk aware. It is important that we talk about investing so we understand the risk and reward”.

Whilst all investments are subject to risk, the level of risk can vary depending upon the strategy. For example, an investment strategy with a high concentration of equities or unlisted investments is likely to be more volatile than a strategy that is more balanced with bonds. It is also important to be mindful of the planned investment horizon. Traditionally, a pension was always seen as something that should not be exposed to undue risk and therefore invested in a low-risk strategy. However, if the time horizon before drawing on a pension is more than twenty years, then it may be possible to take a higher level of risk as in the long run, equities have an upward growth trend despite short term volatility.

That can be a worry for some investors: seeing their investments fluctuate on a regular basis without understanding the underlying reasons. Lack of knowledge in respect to investments isn’t just a barrier for new investors but also existing ones. 57% of women don’t know what type of investments they actually own (compared to 38% of men)5.

Although we live in a world of free-flowing information, sometimes it can feel like a tidal wave that’s too much to navigate. But it’s important to try to dip your toe in the water and plan for your future, especially since the International Longevity Centre estimates someone born in 1970 may have to wait until they are in their 70s before they will be able to draw their state pension.

This makes the reasons for taking control of your finances even more compelling.  The first step doesn’t even have to cost anything or involve risk, it could simply be around better understanding risk and investments. At SG Kleinwort Hambros, we regularly publish our macroeconomic views through articles and videos that simplify the basics of investing. If you wish to go further, we would be delighted to start a conversation.



1 Office for National Statistics, “Gender pay gap” Report November 2023

2 Institute for Fiscal Studies, “The gender gap in pension saving” Report, March 2023

3 Royal London/Opinium survey, sample of 4,000 UK Nat rep consumers, June 2023

4 University of Bath, “Gender differences in optimism, loss aversion and attitudes towards risk” Research, June 2023

5 AJ Bell, “Money Matters” Report based on an independent survey of 5,000 UK adults conducted by Opinium, August 2021




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