Despite some improvements in work, women are still lagging behind on pay

There can be no doubting the strides that women have made in recent decades when it comes to professional development; but when it comes to discussing personal finance and women, it’s still hard to get away from two key facts – they earn less and yet live longer than men. This raises a host of financial issues specific to the fairer sex.

Ahead of International Women’s Day on Saturday, we take a female specific view on personal finance and find out where women are winning – and where they still need to catch up with their male counterparts.

Women still earn less
They out-perform their male peers at second level and university; they are frequently at the top in professional exams, and have risen to the top of most career ladders, yet women still lag their male peers when it comes to how much they get paid.

According to an EU study last year, women across Europe earn around 16 per cent less per hour than men. Ireland performs a little better than this, with a gender pay gap of 13.9 per cent, and considerably better than the UK where the gap is as high as 20 per cent. However, this still means that for every €100 a man earns, a woman will typically only earn about €86.

There are some obvious reasons for this. Women are the majority of part-time workers in the EU, with 32.6 per cent of women working part-time against only 9.5 per cent of men for example. But discrimination, opting for lower paid jobs and performing poorly when it comes to pay negotiations, mean that women continue to lag their male counterparts.

Women may not have enough life cover

How much is your life worth? While “priceless” might come to mind, if you’re buying a house or have dependents, you’ll have to put an actual value on it, and make sure that you putting enough of a value on it.

It’s a common mistake among couples. Together they take out mortgage protection to cover the cost of their home or investment properties, but when it comes to putting protection on their own life, women are still opting for inadequate protection. With men still less likely to take a step back from their career, they typically have greater life assurance protection, given that they may be entitled to death in service cover at work. A woman in a part-time role on the other hand, may have fewer entitlements, while the overall cover may be less, given a lower salary.

And a stay-at-home-mother might not realise just how much it would cost to replace her – childcare, housekeeping, etc – while even women who out-earn their partners may not adequately value just how much they are contributing to their family's finances, and how much that family could suffer financially if the matriarch was to die. "Women need protection regardless of whether they're earning or not," says insurance broker John Geraghty.

Consider also that you may now need to pay more for this. Given their greater longevity, women typically had to pay less for life cover than their male counterparts, but since the introduction of Europe’s Gender Directive in 2012 insurance companies are now unable to quote on the basis of gender.

According to Geraghty, this means that life assurance has become more expensive for women and products like income protection have become cheaper for men. However, he notes that life assurance prices have in general been on a downward trend, which may compensate somewhat in the increase women will have seen.

If you have a limited budget, it might make sense to focus it on where you might need cover most. For example, Geraghty says that an analysis of all the claims paid by insurers on their female customers, nine out of 10 claims will be for cancer. Given that serious illness policies are expensive, he suggests opting for a cancer cover policy, such as that offered by Zurich. For example a policy covering €200,000 of cancer cover for 20 years would cost €15.18 a month for a female aged 20, rising to €58.45 a month for a 40-year old female.

Women need to

save more for a pension
Part-time work, unpaid leave, long sabbaticals, a longer life expectancy and lower salaries are

all hurting women when it comes to saving for their retirement.

Standard Life, which holds its annual Women's Pensions Day this week to coincide with International Women's Day, conducted some research into female pension provision and found that a staggering seven out of 10 women don't have a private pension – even though demographics suggest that women are now expected to live until they are 81.6 years, compared with 76.8 years for men.

"We would like to see women enjoying and looking forward to a comfortable retirement and talking to their friends/family/advisers about how much they need to save to achieve that," says Aileen Power, head of corporate communications with Standard Life. "Then they need to get cracking and save for it ."

The Standard Life survey found that the average female nest egg is just €37,400, which would give a retirement income of about €1,800 a year. The average male pension pot on the other hand is more than twice this amount at €86,300, giving a retirement income of about €4,100 a year.

And, when women consider taking some time out from the workforce to raise their family, guiding their decision is whether or not their family will be able to meet the mortgage every month, or have enough for health insurance and holidays, without their salary. Considering how the move might impact on their retirement is unlikely to be a top priority. However, research suggests that it should be.

Financial services provider IFG for example, has found that working mothers who take five years off to raise a family could end up with a pension fund worth almost €200,000 less on retirement, than if they had full, uninterrupted service until 68. This represents almost a reduction of one-third in a pension fund on retirement.

Divorce/separation
It's not just in saving for their own pension that women are not doing enough of. They may also be forgoing income from their partner's pension if their relationship ends. According to solicitor Muriel Walls of Walls & Toomey, wives or civil partners may be entitled to a large portion of their ex's pension pot on separation or divorce, via a pension adjustment order.

Pointing to the example of a man who has accumulated a pension pot of €800,000, Walls says that the courts could award a wife as much as half of this pension if the couple had been married for 30 years. Based on a lump sumof €400,000, it could deliver a pension of about €20,000 per year on retirement.

“When marriages and relationships break down, I would urge people to ensure that they secure a fair share of their ex’s pension pot. It may be the case that the pension pot is a considerably larger asset than is realised. In practice, this is particularly important for women who are less likely than men to have their own pension and who also live longer than men,” she says, adding that civil partners have exactly the same status as spouses, but that while co-habiting couples have a right to apply for some pension provision, they won’t have the same entitlements. But she cautions that women in such positions should take advice before opting for a slice of their partner’s pension, as it may not end up being worth as much as is believed.

“It’s a very inexact sceience,” she says, “it mightn’t be worth what the piece of paper says it is. You need to understand the quality of assets underlying the pension.”

For couples where the female may be the higher earning partner, Walls notes that it’s often the case that while the husband may not be entitled to a share of his wive’s pension, he may retain her death in service benefit, so that if she dies while still employed, he will get the lump-sum her company pays out.

Insurance costs
When it comes to car insurance, women face a similar issue. Insurer Aviva for example says that women on average are better drivers than men, although it varies according to age group. However thanks to the EU's gender directive (again), Aviva estimates that women have been disadvantaged by about 15 per cent on average by the introduction of gender neutral pricing.

Indeed a survey from quoteme.ie shows that women’s car insurance policies have increased by an average of 11.7 per cent since the directive was introduced in 2012. Young men aged between 17-24 on the other hand, have seen their cost of car insurance fall by an average of 10.2 per cent.

Investing

In January, a study showed that hedge funds run by women typically out-perform the average hedge fund. It’s the latest in a line of surveys that says that women are frequently better investors than men.

The reasons for this are difficult to pinpoint exactly, but may be down to the fact that men are more competitive than women and, in striving to out-perform their peers, men may assume too many risks.

This leads us to another reason – women are more risk averse, and tend to do their homework, making a thorough assessment before making a decision. Research suggests that women are also more inclined to acknowledge when they have made a mistake and will take action to rectifying it. As Brian Weber, head of Quilter's Dublin office notes: "Women have a greater attention to detail in terms of investment decisions and investment restrictions. They will ask more questions about risk to capital, past performance and they are more likely to specify areas of investment that they will not consider on ethical or social grounds."

However, despite these attributes, women continue to lag men when it comes to investing. Take a look at Standard Life’s investment business. About 70 per cent of investors in its Myfolio range of funds are men – and women tend to opt for less risky options, with 67 per cent choosing fund options at the bottom end of the risk scale, compared with 54 per cent of men.

While women may be involved in the decisions of some of those 70 per cent of men, there still appears to be a greater reluctance on the part of women to get their money working better for them.


In numbers: What women really think about pensions
As part of its Women's Pensions Day, which it initiated last year to coincide with International Women's Day, Standard Life conducted a survey into why just 30 per cent of women have a pension. But what did the women surveyed have to say?

Question: The top five reasons for not having a pension?

27%
Can't afford to save into a pension

24%
Never got around to it

12%
Believe pensions aren't good value for money

9%
Say they haven't joined employers' scheme

9%
Say they don't fully understand pensions

Question: On a night out with your girlfriends, how likely are you to discuss pensions and how much you need to live on in retirement?

46%
Said "not a chance"

39%
Said "unlikely"

6%
Said "likely"

1%
Said "very likely"

7%
Were neutral