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We’ve long been told that women aren’t saving enough for their later years. But is this because financial language is too male or, dare I say it, sexist?
A large investment manager caused quite a stir recently by suggesting that calling a pension by another name could get women to engage more in their savings. Fidelity International found that many women think the way that investments are communicated is “complicated”, “intimidating” and “incomprehensible”.
Of the women it surveyed, half said replacing the word pension for “retirement income” would make them feel more confident about engaging with their future finances.
Men and women do think and act differently, and can have different objectives and experiences. We are told time and time again that women are not as big risk-takers as men and are less confident, especially when it comes to investing.
Those who work in finance should of course be aware of the nuances when communicating with their customers. But it’s frankly patronising to suggest that women need to be treated differently to men when it comes to language.
Using different words for women risks implying that we poor, little females need our language dumbed down.
And while the research is well-meaning, focusing on women misses a much wider problem. There is far too much financial jargon – but this is the case for all of us.
With complex terms such as “uncrystallised funds pension lump sum”, it’s no wonder pensions have a big engagement problem. But if we’re going to make pensions simpler, we must do it for everyone. I’m sure most men would better understand phrases like “retirement income” or “free money”.
The reasons why women end up with smaller pensions than men are much more complex than language.
The average pension (both workplace and personal) of men aged 55 to 64 is worth more than twice that of women of the same age, according to Fidelity.
Women are more likely to take time off work to look after children and be self-employed at some time in their working lives, so they miss out on employer pension contributions. They also earn less on average.
Interestingly, stock broker Interactive Investor recently found that its female customers tend to put more money into their investment Isa or trading account than men, but they invest far less in their self-invested personal pensions (Sipps).
Is it because the word “pension” puts women off? I doubt it – the broker’s female customers said despite the tax relief on pensions, they preferred the flexibility of Isas and not having to pay tax when withdrawing sums.
Encouragingly, the gender pensions gap is narrowing, albeit slowly. The Department of Work Pensions’ auto-enrolment figures show that overall, women have slightly higher participation rates than men, with 88pc of women staying in a pension scheme once enrolled, compared to 86pc of men.
Of course we want to make sure women have enough money to have a decent retirement but treating them like a different species is not the answer. All of us are in dire need of less complexity when it comes to money.
stephanie.baxter@Finance.co.uk
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