Is mental load the key driver in the widening gender pensions gap?

Should we stop telling women they lack confidence and need empowerment to invest? Some psychologists now say the lack of knowledge and confidence is a “misdiagnosis” and it is instead efficacy causing the gender pension and investing gap.

We’ve been hearing it for years – women don't invest or save enough into a pension because they are not confident and that women should all get into a room and empower each other. But is this just patronising fluff excusing the pay gap? Are there other issues behind the widening gap?

One psychologist, together with the University of Edinburgh, is suggesting another reason, putting the existence of the gender pension gap down to systemic, situational and social barriers.

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Emily Shipp, a psychologist and associate of the Edinburgh Futures Institute, who also authored the report It’s Not About Confidence: The Hidden Forces Shaping Women’s Financial Futures, said: “For too long, the ‘confidence gap’ narrative we see in financial advice and media reports has masked the real systemic, situational and social factors that result in the pensions gulf.”

Take women’s mental load, for example. We carry a lot of it. I know I do. There is always something to plan or take care of and it often comes at the expense of looking after your own financial affairs.

“Women feel an overwhelming sense of mental load and pressure pretty constantly. It’s the work, the to do lists and all the stuff you hold in your mind,” Shipp said.

So, of course we do not have time to fit finance into an already cluttered brain. Perhaps it has nothing to do with confidence, but more about the lack of headspace making it difficult to take the steps to start investing and pension planning.

“Mental load and time scarcity operate together. Women are more likely to carry the ongoing cognitive labour of anticipating and coordinating care, while also spending significantly more time on unpaid work. These pressures reduce both the mental bandwidth and the available time needed for sustained engagement with long-term financial planning,” Shipp said.

The financial barriers for women

The report, supported by financial services firm Evelyn Partners, found 60% of women do not have a financial plan for retirement.

Systemic problems stem from defined contribution pensions, which compound the care-related pensions gap – and it is women who are often carers. The system does not work.

Social problems arise because there is a huge focus on pushing the ‘confidence gap’ yet addressing non-linear working patterns and normalising needs to be built into systems.

When it comes to situational solutions, the report suggests there needs to be more female financial advisers as well as the acknowledgement that the product journey matters – and these may be different for women.

I write this as I sit in Evelyn Partners’ offices, a firm established in 1836 – a time when women had no room at the table when it came to finances.

Evelyn Partners, like many financial services firms, was set up by men and skewed toward helping men.

Now, 200 years later, many firms are still making their way out of the male-dominated world they built their businesses around.

While firms like Evelyn Partners are making changes and doing more to understand how best to serve women, the industry as a whole has some way to go.

“Historically, financial advice and pensions policy have centred on typically male, linear career trajectories and financial goals, rather than the multi-phase, care-interrupted lives many women navigate,” Shipp added.

What can women do about the gender pension gap?

Women can improve their financial situation by shifting knowledge to informed actions and creating achievable steps, the report suggests.

Shipp said women need to engage with their future self, but in order to look forward they also need to look backwards.

“Look back on your past and see what you did well and how it helped you, and then think about your future self and what you can do,” she said.

“This isn't about predicting, but it’s about understanding what might be important to us in future and what we might need to consider and bring that into financial planning. Imagining your future is one of the biggest psychological barriers for many.”

Shipp added that looking at your future self was particularly important in a world of defined contribution pensions where savers have to make decisions around funds they invest in and be engaged with their pension.

“It amazes me how many people have not looked at their pension – log into your online account and see if that default fund is right.”

As it stands, men are expected to stop working with 75% less in pension savings by age 60 compared to women. But as long as we stop telling women they lack confidence and knowledge and change the narrative that tackles the systemic, situational and social barriers, the gender pensions and investing gap may finally be able to close.

See our article looking at the stories of two women who took steps towards getting to grips with their pension and the outcomes.

Don't miss the latest episode of MoneyWeek Talks, available on YouTube and your favourite podcast platform, where Yana Shkrebenkova, the CEO of Revolut Wealth and Trading UK, discusses why women should invest and how.

Yana Shkrebenkova, Revolut Trading | MoneyWeek - YouTube

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