Is mental stress the main factor causing the gender pension gap to widen?

The pension gap may be widening, but it is more related to the mental burden women bear than it is to a lack of financial literacy

Should we stop telling women that they lack confidence and need to be empowered to invest? According to some psychologists, this is a "misdiagnosis" and that the gender pension and investing gap is actually caused by efficacy.

We've been hearing for years that women should get together and empower one another because they don't invest or save enough for a pension because they lack confidence. But is this merely condescending rhetoric to justify the pay disparity? Are there other problems contributing to the growing disparity?

A psychologist and the University of Edinburgh are proposing an additional explanation, attributing the gender pension gap to social, situational, and systemic barriers.

"For far 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," stated Emily Shipp, a psychologist and associate of the Edinburgh Futures Institute who also wrote the report Its Not About Confidence: The Hidden Forces Shaping Women's Financial Futures. The "

Consider the mental strain experienced by women. We have a great deal of it. Yes, I do. There is always something to organize or manage, and it frequently takes precedence over managing your own finances.

"Women experience intense pressure and mental strain almost all the time. Its the work, the to do lists and all the stuff you hold in your mind," Shipp said.

Naturally, we don't have enough time to fit finance into our already busy brains. It might have less to do with confidence and more to do with a lack of focus that makes it hard to begin investing and pension planning.

"Time constraints and mental strain work together." In addition to spending a disproportionate amount of time on unpaid labor, women are more likely to perform the continuous cognitive labor of planning and organizing care. According to Shipp, these demands lower the amount of time and mental capacity required for consistent long-term financial planning engagement.

The obstacles women face financially.

According to the study, which was funded by the financial services company Evelyn Partners, 60% of women do not have a retirement plan.

Defined contribution pensions, which exacerbate the care-related pension gap, are the root cause of systemic issues, and women are frequently the caregivers. The system is broken.

Pushing the confidence gap is a major focus, but systems must also address non-linear working patterns and normalize. This leads to social problems.

In terms of situational solutions, the report recommends increasing the number of female financial advisers and acknowledging the importance of the product journey, which may be different for women.

As I write this, I'm sitting in the offices of Evelyn Partners, a company founded in 1836 when women were not allowed to participate in financial matters.

Like many financial services companies, Evelyn Partners was founded by men with a bias toward serving men.

Two centuries later, many businesses are still trying to break free from the male-dominated environment in which they were founded.

The industry as a whole still has a ways to go, even though companies like Evelyn Partners are changing and doing more to figure out how to best serve women.

"Financial advice and pensions policy have historically focused on typically male, linear career trajectories and financial goals, rather than the multi-phase, care-interrupted lives many women navigate," Shipp continued.

How can the gender pension gap be addressed by women?

According to the report, women can improve their financial circumstances by creating attainable steps and converting knowledge into informed actions.

According to Shipp, women must engage with their future selves, but they must also look back in order to look forward.

"Think about your future self and what you can do, and then look back at your past and see what you did well and how it helped you," she advised.

"This isn't about making predictions; rather, it's about knowing what might be significant to us in the future and what we might need to take into account when making financial plans. One of the largest psychological obstacles for many people is visualizing their future. The "

In a world of defined contribution pensions, where savers must make decisions about the funds they invest in and be involved with their pension, Shipp continued, "looking at your future self is particularly important."

"It's astounding to me how many people haven't checked their pension. Check your online account to make sure the default fund is correct. The "

Currently, men are predicted to retire at age 60 with 75% more pension savings than women. However, the gender pension and investment gap might eventually be able to close if we stop telling women they lack confidence and knowledge and alter the narrative to address the systemic, situational, and social barriers.

See our article about two women who took action to deal with their pension and the results.

Yana Shkrebenkova, CEO of Revolut Wealth and Trading UK, talks about why and how women should invest in the most recent episode of BFIA Talks, which is available on YouTube and your preferred podcast platform.

You can watch Yana Shkrebenkova, Revolut Trading | BFIA | YouTube.