“For me,” he said, “the key takeaways were the effects of career, family support, life events and financial literacy and confidence on wealth accumulation. Even a small gap from the workplace, a period working part-time or delayed career trajectories can have a long-lasting and detrimental impact on women’s wealth at retirement. And the effect can be disproportionate to the amount of lost earnings as these may have formed a significant proportion of savings for retirement.”
The key factors behind the gender wealth gap
Among the findings of the report, it was revealed that the UK has one of the higher wealth gaps in Europe, and is below the global average for gender wealth equity at retirement. Examining the key reasons for this, Ball highlighted that in the UK, a lack of affordable and accessible childcare, along with challenges in social care, compounds the disproportionate share of unpaid care work that women assume and adds to the challenges of generating equitable retirement wealth.
Another standout statistic pinpointed by the report found that the gender wealth gap at retirement increases with seniority. One thing that has become increasingly apparent from many of the Gender Pay Gap reports that have been published over the past few years, Ball said, is that many organisations have a much lower proportion of women in the most senior roles, compared to other levels of the organisations.
“These roles tend to be the most highly paid and, while in-work pay is not the only driver of wealth at retirement, it plays a significant role in the accumulation of wealth over the course of a career,” he said, “Many organisations, WTW included, have been taking measures to address this problem by consciously increasing the number of women that hold the most senior roles within their organisation, and aiming to ensure that career paths do not get delayed.
“We need to create conditions that will attract more female talent at all levels, and make sure that the right culture is in place to support them.”
How DE&I conversations have evolved
Touching on how current diversity, equity and inclusion (DE&I) initiatives have evolved, Ball noted that work around DE&I has broadened out from its starting point of diversity, to diversity and inclusion – and now to include equity and equitable outcomes. So, he said, it’s critical that we raise awareness of this complex and multi-dimensional issue, its root causes and what can be done to change the path for the future.
“Gender pay is not the only factor that impacts retirement wealth but, of course, the amount people are paid it is a very important factor and differences can be dramatically exacerbated over the course of a career,” he said. “Several of the strategies we are using to narrow our own gender pay gap include understanding the barriers that women face in navigating the corporate environment and focusing on equitable career trajectories.
“This will help more women to reach the most senior, high-paying, roles and help us in closing the wealth gap. We also see that retirement plans, including state benefits, are a significant component of accumulated wealth. Our research highlights the importance of employer-sponsored plans and awareness of the financial advantages of these.”
Assessing the actions that leaders can take
Given the #BraverCultures theme of the 2022 Dive In Festival, it’s essential to look at the actions that can be taken to move the dial on conversations around gender wealth equity and Ball explained that there are several key actions leaders can take to narrow the wealth gap. These are particularly around supporting career equity, inclusive benefits and flexibility, he said. As employers, we need to make sure that the flexibility is in place for people to manage other life commitments without having to leave the workplace entirely.
“And when absences are taken,” he said, “we must make sure that people are able to return as quickly and easily as possible, while accommodating for changes in life circumstances that many employees go through in the course of a career. Women are currently more likely than men to work from home due to taking on a greater share of caring responsibilities. Whilst new, more flexible, working patterns may help to facilitate this and it is imperative that this is not seen as a barrier to advancement.”
Many companies are just beginning to understand the role of employee benefits in driving gender wealth outcomes, Ball said, especially in the areas of health, savings and caregiving support. As leaders, we need to understand the different needs our colleagues have and maximise tailored, cost-effective access to savings programs that incorporate choice and personalisation.
The role of insurance in narrowing the gender wealth gap
Touching on the role the insurance profession has to play in pursuit of narrowing the wealth gap, Ball said that as an industry focused on risk, insurance should be particularly aware of the impact that a prolonged gender wealth gap will have on companies’ business models. This could be through lost talent or talent that hasn’t been used to its full potential.
The insurance industry itself has made a proactive effort to improve its level of diversity and inclusion overall, he said, as well as specifically targeting the recruitment and retention of more women, particularly in senior roles. This will need to include a focus on accessing a wider pool of diverse talent by increasing recruitment from outside of the industry and looking at people from non-traditional backgrounds.
“In addition to the way the insurance industry operates for employees,” he said, “it’s also important to make sure the products being provided are geared towards the risks that women need cover for. Dive In itself has played such an important role in this, in terms of raising awareness of the problems, encouraging solutions and returning to these topics year after year to make sure that progress is made.”