Closing the Gender Pension Gap: Empowering Financial Equality and Beyond

Laura Reidy


Closing the Gender Pension Gap: Empowering Financial Equality and Beyond

Reimagining “What Women Want”, the 2000 American romantic comedy where Mel Gibson’s character gains the ability to hear women’s thoughts after being electrocuted, sparks thoughts on women’s financial aspirations and needs. While electrocution may not be the solution, the film prompts reflection on the disparities in financial planning and investing between genders. Do women have different financial needs from men? If so, what are these differences and are they being addressed?


In trying to tackle the above, it is important to understand the gender wealth gap. This is well documented in Ireland. According to the CSO, the gender pay gap in Ireland for 2022 was 9.6%. Therefore, the average male earned 9.6% more than the average female. In economic sectors, the highest gender pay gap was in the financial, insurance and real estate sector at 24.7%, with average hourly earnings of €41.93 for males and €31.59 for females. The lowest gender pay gap was in the education sector at 2.7% where males earned €36.64 and females earned €35.65 on average per hour.


In March 2021, the OECD launched the report ‘Towards Improved Retirement Savings Outcomes for Woman’ and it found that a woman aged 65–79 in Ireland received a pension that was on average 26% lower than her male counterpart. Therefore, the gender pension gap is 26%, which is the difference in pension savings for female savers compared to male savers. The gap can be primarily attributed to factors relating to the labour market and the design of the pension system. Labour market factors may include when women work part-time, have career breaks, spend more time caring for both children and parents and how they so often earn less during their careers. With pension contributions generally tied to salary, the driving force behind the gender pension gap is intrinsically linked to the gender pay gap. The cost and availability of childcare may have a double effect on women saving for retirement, both in absolute and relative terms. High childcare costs might imply leaving a full-time paid position, altogether or for a part-time one, hence decreasing pensionable salary and linked employer and employee contributions in absolute terms. They can also lead women to stop or reduce their voluntary contribution levels.


How can we address the gender pension gap? Solutions to the gender pension gap are multifaceted, just like the contributing factors. The provision of increased and more affordable childcare and long-term care services would really play a role to increase female employment levels and ensure increased continuity in employment. In relation to childcare, while a universal subsidy is in situ for parents to help meet the costs of childcare, it’s not enough to fix the issues actually at play. My own personal experience may not be that unusual, I wanted to return to work after having my children at 6 months however I could not find a creche that would take my children until at least 12 months. Teachers, nurses and other female dominant sectors are all reporting staff shortages as they wait for mothers to be able to source childcare to return to work. Solutions also, in part, rest with policy makers – we need to look at the pension system design through the gender lens and, by proxy, pension policy should be progressive to mitigate/counterbalance gender differences. Pension policy and design should allow for continued vesting for women during periods of care. Economically, either the state and/or employers would fund contributions during these periods. Further pension policy should be flexible to allow spouses to contribute to each other’s retirement plans during periods of care.


Do women have other investing characteristics that sets them as unique to men? According to the research*, 50% of women said they were confident managing money compared with 56% of men. Women reported being less satisfied with their financial situation (29% vs 33%) and less knowledgeable about financial matters (28% vs 36%). The difference between the sexes is greatest when it comes to having the confidence to choose investments (15% vs 27%) or pensions (16% vs 27%) without the help of a financial advisor. Where financial advice is concerned, women are more likely than men to want guidance on savings (76% vs 66%) and meeting financial goals (71% vs 61%) but they’re also more likely to think they don’t understand enough about finances to talk to a financial advisor (19% vs 13%). Financial wellbeing encompasses an individual’s ability to effectively manage their finances and plan for the future, irrespective of their financial status. While the fundamentals of sound financial wellbeing apply universally, women encounter distinct obstacles. With women typically living longer than men, they require greater financial resources to sustain their quality of life in retirement. In the realm of personal finance, women often demonstrate varying levels of confidence and knowledge compared to men. While they frequently seek guidance on savings and financial goals, they may feel less assured in making independent investment decisions. To address this disparity, providing women with access to advisory services is essential for empowering them to navigate the complexities of investing effectively.


*The annual Bank of Ireland Financial Wellbeing survey conducted for Bank of Ireland by RED C in August 2023.


On this point, the need for more female financial advisors is paramount. While some may argue that the gender balance among financial advisors is inconsequential, I disagree. Creating a diverse advisor pool is fundamental to ensuring a financial system that effectively supports its clientele. Additionally, the ongoing advice gap highlights the urgent necessity for the sector to engage a broader spectrum of consumers. Although lack of diversity may not be the root issue, it certainly exacerbates the problem. A wider array of perspectives and strategies is vital for delivering comprehensive advice on a larger scale.


In conclusion, policy reform can take years to come to fruition and is just aspirational to women who might want to take action today. Here are some financial planning tips tailored for women:

  1. Set Clear Financial Goals: Define short-term and long-term financial objectives, such as saving for emergencies, retirement, education, or major purchases. Having specific goals helps in creating a targeted financial plan.
  2. Understand Your Cash Flow: Track your income and expenses to understand where your money is coming from and where it’s going. This awareness can help you make informed decisions about spending, saving, and investing.
  3. Build an Emergency Fund: Aim to save at least three to six months’ worth of living expenses in an easily accessible account. Build emergency savings to cushion the impact of reduced income or periods of unemployment.
  4. Prioritise Debt Management: Focus on paying off high-interest debts, such as credit card balances, as quickly as possible. Consider consolidating debts or negotiating lower interest rates to reduce financial strain.
  5. Invest in Your Retirement: If you are employed but not already part of the work retirement scheme/PRSA, join today. Furthermore, if you have the scope to and can afford it, top up your retirement plan by paying into an Additional Voluntary Contribution (AVC). Secondly, look for any deferred retirement pots you may have from previous employments. In my experience, when sitting down with prospective clients, most will generally not have a full handle on how their retained retirement benefits/contracts are managed and quite often their retained benefits do not form part of their active investment strategies. Finally, set yourself a retirement savings goal, your retirement arrangement should be flexible enough to accommodate contribution increases, decreases, stops and restarts but remember saving something is better than nothing. As part of any investment strategy, a financial advisor can work with you to determine investment goals, identify attitude to risk and define an appropriate investment term.
  6. Seek Professional Advice: Consider consulting with a financial advisor, particularly one who understands the unique financial challenges and goals faced by women. An advisor can provide personalised guidance and help develop a comprehensive financial plan.
  7. Protect Your Assets: Protection planning is at the core of financial planning and is essential for financial resilience in the face of major health events, injury, or death.


Remember that financial planning is a dynamic process that requires regular review and adjustments. By implementing these tips and staying proactive, there is no reason why women cannot work towards achieving greater financial security and independence. I guess “What Women Want” extends beyond the realm of romantic comedy to spotlight crucial conversations about financial equality and empowerment. By addressing systemic barriers and promoting better representation, we can strive towards a future where women’s financial aspirations are realised on an equal footing.