Covid-19 will have ‘implications for women’s financial futures’
The study, which coincides with International Women’s Day, found the average woman earned an average of £463 less per month than usual during the pandemic.
The investment company’s research into women’s finances found the shortfall could equate to £5,556 over the course of a year – close to a quarter of the average annual salary for women (£20,515).
This drop in income is having a knock-on effect on women’s ability to save and invest for their futures. Three in 10 (28%) women said the amount they have saved in the past 12 months has reduced, 17% of women have invested less, and one in eight (13%) have decreased the amount they contribute to their pension.
This impact on long-term savings is felt most acutely by women in their 40s, with nearly one in five (18%) decreasing their pension savings over the past 12 months.
With women already facing significant gender pay, pension and investment gaps, any further reduction has the potential to further push back women’s progress financially.
To cover falls in personal income, many women have needed to make financial decisions that could have long-term financial implications.
Two-fifths of UK women (40%) who have experienced a fall in their income have been forced to dip into their savings to cover daily outgoings, while more than 10% have resorted to borrowing on a credit card to make ends meet.
Maike Currie, investment director at Fidelity International said: “The last 12 months have undoubtedly challenged all of us. However, women have been – and continue to be –disproportionately affected by the pandemic, as documented by both the United Nations and the Women and Equalities Committee.
“Female-centric industries have borne the brunt of job losses, furlough and income reductions, and women continue to balance this with more unpaid work like childcare and elderly care.
“Financially, the impact is significant. Reduced earnings and the already significant financial gender gaps when it comes to income and long-term savings, makes this particularly concerning. While the end of lockdown restrictions may now be in sight, the repercussions of women’s experiences over the last 12 months may reverberate long into their futures.”
Tips for women on how get back on track financially
- Re-build your safety net
Sit down and look at your finances. Consider the impact the pandemic has had and how to get back to where you were before. Working out the amount you can afford to put into your savings each month will help you to slowly build this back up. Even small amounts can make a big difference over time.
- Consider investing
Once you have established a savings pot for emergencies, start to think more about your longer-term finances. Having enough saved away will make all the difference to how you can spend your retirement. For example, can you divert the money you have left each month into your pension or a stocks and shares ISA?
- Don’t forget your pension
If you saw a reduction in income over the pandemic or reduced your contributions into your pension, it’s important that you consider how you can boost your pot once you’re more financially secure.
Making the most of government measures such as the ‘Carry Forward’ rules will allow you to make up for previous years where you didn’t contribute as much. Alternatively, if you’re a couple and one of you has taken a career break or a reduction in income, your partner can contribute into your pension to keep you on track.