Midlife caregiving widens gender pay gap – Hargreaves Lansdown

Sarah Coles explains how the gender pay gap reflects deeper systemic issues that emerge as women progress through their careers.
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According to Sarah Coles, head of personal finance at Hargreaves Lansdown, the gender pay gap reflects deep systemic issues that emerge as women progress through their careers.

The gap does not appear early in a woman’s career, or even at the typical age of childbirth; in fact, women aged 18 to 21 were often found to earn more than their male counterparts.

However, Coles explained that the real shift happens later, in their 40s, when many women take on increased caregiving responsibilities, often for both children and elderly family members.

Coles refers to this period as a ‘flexibility gap’ or ‘cost-of-childcare gap’, as many women make career compromises that ultimately impact their long-term earnings.

In some cases, these compromises mean shifting to part-time work, choosing roles closer to home, or opting for remote work – all of which limit career advancement and overall earnings.

Others take complete breaks from the workforce with plans to return when their children are older, only to encounter further challenges, such as difficulties re-entering a changed job market or needing to step back again to care for elderly parents.

This accumulation of unpaid caregiving responsibilities leads to a significant gender pay gap, highlighting that income inequality often extends beyond pay alone to include the structure and flexibility of work.

Lower lifetime earnings leave many women struggling to build emergency savings.

Coles pointed out that, although women are statistically strong savers and hold more cash ISAs than men, lower incomes often mean they do not have sufficient resources to set aside funds.

This problem is particularly pronounced among single mothers, who are far more likely to lack sufficient emergency funds – about 75% of single mothers do not have even three months of essential expenses saved, a minimum financial safety net.

A gender gap in retirement savings left many women facing an uncertain financial future or a retirement spent relying on a partner’s income.

Additionally, women were less likely to invest, which Coles noted could reduce their future financial resilience and make it even harder to close the financial gap.

For women to build financial resilience, Coles highlighted several proactive steps.

The Government’s planned expansion of 30 hours of free childcare for children aged nine months and up, due for rollout by September of the following year, is expected to relieve some financial strain on working families.

In the meantime, Coles suggested that couples approach financial planning jointly to ensure an equitable distribution of savings and caregiving costs.

She encouraged couples to plan household budgets together, rather than allowing one partner to shoulder all the childcare costs while the other focuses on savings and investments.

By balancing budgeting responsibilities, couples can ensure greater financial security for both partners.

Coles also noted the importance of considering long-term pension contributions for both partners, rather than assuming that only the higher earner should prioritise pension savings.

Although higher earners might receive more tax relief, she explained, both partners ideally should have retirement funds to ensure independence in retirement.

Couples can also take advantage of pension contributions for non-working partners.

For example, even if one partner is not working, the other can contribute up to £2,880 annually to their pension, with tax relief increasing it to £3,600.

Zarah Choudhary

Zarah Choudhary is a Reporter for Workplace Journal and The Intermediary

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