money

Insuring Women’s Futures, the 6 Moments that Matter

16 December, 2019 By WiC

Insuring Women’s Futures is a voluntary, market-led programme established under the Chartered Insurance Institute to improve women’s financial resilience. It brings together a cross-section of business leaders, experts and influencers drawn from policy, regulation, academia and the third sector to support making lasting change. For the past three years, these contributors have shared their insights, experiences and expertise.

The result is a series of ambitious, practical Manifesto recommendations.

Insuring Women’s Futures has identified ten overarching recommendations where interventions can be made to improve financial resilience for women and wider society in the UK. The recommendations take into account how life in the UK is changing and the implications for all of our financial resilience, now and in the future. The interventions combine policy and practice and are centred on where the most impact can be made, targeting Moments that Matter across women’s financial life journeys.

Recommended interventions

Inspiring young women to own their financial future
Pensions equality in the workplace
Equal pension rights for those on low pay
Workplace flexibility and financial wellbeing to address the impact of part-time on pay and pensions
Financial engagement and wellbeing strategies that reflect women’s whole life journeys
Insurance and financial services’ role in supporting financial futures
Fair pensions outcomes for those in relationships and for break ups
Pensions for carers and a national conversation about caring
Gender-disaggregated data and use in policy and practice
Female Financial Resilience Forum

These Moments that Matter impact women across the life stages from girls to elderly women according to individual life journeys. For example, becoming a mother or caring for an elderly relative have different consequences depending on whether and how women are working, studying or are in good or poor health.

The 6 Moments that Matter

Growing up, studying and re-qualifying
Entering and re-entering the workplace
Relationships: making up and breaking up
Motherhood and becoming a carer
Later life, planning and entering retirement
Ill-health, infirmity and dying

12 Perils and Pitfalls

By analysing women’s life circumstances, the decisions women take and the life events women face, the research highlighted key differences in men’s and women’s risks in life. 12 Perils and Pitfalls have been identified as the top financial risks faced by women through the life course. In addition, the research identifies patterns in how the Perils and Pitfalls impact women’s financial resilience at different life stages on the Female Financial Life Journey, with the 6 Moments that Matter serving as key intervention points where meaningful change can be made.

Download the Manifesto

Visit our searchable Knowledge Bank for a range of reports and studies on gender diversity, leadership and related topics.

Generation Austerity: Brexit and Beyond for 18-25yr olds

5 December, 2016 By WiC

MRM’s fourth annual Young Money Report, “Generation Austerity: Brexit and beyond”, looks at the attitudes to finance of 1,000 18-25 year olds who have grown up in the dark shadow of austerity. The study considers the views of young people on a range of topics including

pensions and benefits
advice and access
saving and spending and investing and the economy

as well as featuring contributions from key industry experts across the financial services industry.

Much of the writing and research of this report took place in the wake of the UK’s momentous decision to leave the EU. Many hadn’t expected this, including the markets, with sterling crashing on the news and the stock markets plummeting.

Young people and Brexit not quite what it appears

There was an unprecedented period of national soul-searching in the days that followed and it was to young people that a lot of attention turned. The first stats which emerged showed that they had gone against the status quo, with 71% of 18-24 year olds voting to remain.[1] However, the turnout stats told a different story. Research by Sky Data indicated that of 18-24 year olds, only 36% had actually bothered to vote.[2] So a familiar story emerged of young people watering down their bargaining power in important matters by not exercising their constitutional rights.

Trust in Financial Services low

A similar narrative around a lack of engagement crept into the results of the survey. Trust in financial services is low, and apathy high. Many young people are unwilling to engage fully in key areas of financial services including pensions, saving and investing – all of which are vital to the financial wellbeing of the population.

Face barriers that parents didn’t

However, the report also reveals that they face a number of barriers that their parents didn’t. Job uncertainty and few opportunities to get on the housing ladder, coupled with soaring rents and a lack of disposable income have all contributed to the inability of ‘Generation Austerity’ – let’s call it ‘Generation A’ – to engage with the sector. Nearly half of those we surveyed (48%) expected to be worse off following Brexit.
The report explores some of the reasons behind this, and together with the contributors, examines how we can encourage Generation A to interact more effectively with financial services, particularly as we consider the Brexit fall-out.

Read the full report

Visit our searchable Knowledge Bank for reports on Diversity, Leadership and associated topics.

DC Universe – it’s not about outer space

6 June, 2016 By WiC

The ageing of populations around the globe is causing an acceleration in the shift to Defined Contribution pensions.

We all know, because we’re often reminded, that we are living longer. A greying society is not just a trend in the UK, however; it is a global phenomenon. According to the UN’s medium population projections, the number of people aged over 65 will rise from just over 600 million today to close to 2.5 billion by 2100.

Furthermore, over the next century, the growth in the number of older people is expected to far outpace the rise of the working age population, as the chart below demonstrates. The UK is on a similar path.

Source: World Economic Forum

Dramatic increases in life expectancy have a profound implication for politics and the welfare state; moreover we see many of the models designed to manage those systems start to come under pressure, or even unravel.

Workplace pensions are a case in point. Defined benefit (DB or ‘final salary’) schemes promise participants a highly predictable income in retirement, based on a formula linked to earnings and length of service. If you have a DB pension, your employer is responsible for funding the scheme and for ensuring there’s enough money to pay your pension income at the time you retire.

But the DB model has mainly relied on a broad base of young members to support fewer retired members. As the ratio of old to young gets bigger, not only does DB become more difficult to administer, it presents a significant financial risk to companies, governments, and other institutions.

Defined contribution (DC) pensions, on the other hand, require you to build a ‘pension pot’, with you and your employer putting money into your chosen investments. Unlike a final salary scheme, there are no income promises; the value of your pension pot is determined by the performance of your investments. Consequently, most of the risk is placed on your shoulders rather than those of your employer.

Off balance

Final salary schemes have long been giving way to DC-type plans as companies transfer pension liabilities off their balance sheet. In the UK, many final salary schemes have closed, and there has been growing participation in DC schemes brought about by ‘auto-enrolment’.

But the same phenomenon can be seen around the globe, as regulatory changes serve to accelerate the rate at which retirement markets converge towards DC.

Japan, for example, has one of the fastest-ageing populations in the world. It has a long history of DB pension plans, but the government is legislating to expand coverage of its DC scheme nationwide.

In the US, the move from DB to DC has been happening for several decades. In 1980, of those private sector workers who were in a workplace pension scheme, 60% were only covered by a DB scheme. But by 2006 that had fallen to just 6%2. Stricter funding requirements imposed by government have often been used to defend the closure of many schemes.

Great expectations

So how does the move from DB to DC affect people in the UK? Put simply, the government now expects much more from individuals in terms of having the expertise to manage their own retirement planning affairs.

You are expected to translate the value of your pension into income terms and make appropriate investment decisions; you must ensure you have saved enough to maintain your lifestyle over an unknown period, and you must understand costs in retirement to avoid an income shortfall.

Admittedly, a minority of people enjoy making such decisions, but the reality is that most of us don’t know how to manage all of the risks described above. New rules introduced last year, which give people the freedom to do what they like with a pension from age 55 onwards, only serve to increase the possibility of them making a mistake.

Building a pension pot and drawing an income from it requires you to manage a combination of risks, and demands a different mindset. In the past, individuals retiring with a final salary pension or annuity have generally only needed financial advice at the point of retirement. Going forward, those retiring with a DC pension will need to take financial advice not just up to that milestone, but throughout their retirement.

To receive a complimentary guide to wealth management, retirement planning or Inheritance Tax planning contact Sophie-Jane Keelaghan on 07970 299980 or email sophie-jane.keelaghan@sjpp.co.uk

1 World Economic Forum, 2 October 2015

2 Handbook of Aging and the Social Sciences, 2011