Growing numbers of working women face the need to plan their finances more effectively, especially when it comes to pensions, according to a report published today by the financial watchdog, the Financial Services Authority (FSA).

The report, Women and personal finance: the reality of the gender gap [PDF], shows there is little difference in ownership of financial products between men and women in similar social positions and roles, though there are wide variations between different groups of women. And while more women of working age are financially independent, women still have lower levels of pension ownership than do men. For example, only 27% of married women have a pension, compared with 47% of married men.

The FSA’s Consumer Relations Director, Christine Farnish, said, “The good news in today’s report is that growing numbers of women of working age are financially independent, with fewer differences between men and women in the ownership of financial products. The report highlights the importance to women of planning their finances from an early age, in order to cope with developments, such as career breaks for raising families, that fall disproportionately on women.

“The bad news is that pension ownership is still significantly lower among women than men. Stakeholder pensions may go some way towards helping women in this respect, because they offer, for the first time, a pension option to non-workers. But there is no escaping the fact that some women, particularly those at or approaching retirement age, will remain disadvantaged.

“More than ever, women need to be helped and encouraged – by the FSA and the financial services industry alike – to make informed decisions in planning for their financial future. The financial services sector has, in the past, tended to overlook the needs of women, particularly married women. It is becoming increasingly important that the industry targets women as individuals with their own financial needs.”

Margaret Jay, Minister for Women said, “Women are increasingly active in the economy as employees and entrepreneurs but they experience more changes to their earning power than men when they take breaks from work or shift from full to part time work while they bring up their children. Women need to plan for these changes to their earning capacity over their lifetimes while the financial services industry needs to provide them with reliable advice and flexible financial products.”

Melanie Johnson, Economic Secretary to the Treasury, said, “The government has already emphasised flexibility, a central issue for consumers, particularly many women, in developing stakeholder pensions.

“I warmly welcome this new research into women’s awareness of financial services. A key goal for this government is to educate all consumers in financial services and these findings will enable the FSA to direct its educational efforts more effectively at women. I also urge financial service providers to look to this research for ways to improve the suitability of products for women.”

The report was drawn up by a Working Group chaired by the FSA, and comprising industry representatives and observers from the Cabinet Office and the Treasury. The group reviewed and analysed existing research on the subject. Among the report’s key findings are:

• women and men in similar social positions and roles have similar levels of ownership of financial products;
• women in full-time employment own an average of 7 financial products, compared to 7.2 for men
• 10% of women in households with an income under £9,500 had no financial products, compared to 11% of men
• there are wide variations in product ownership between women in different social groups;
• there are significant gender differences in pension ownership, which are more pronounced among older age groups;
  the difference in pension ownership between men and women in the 16-20 age group, as might be expected, is just 2%, whereas the gap grows to over 20% for the 25-34 age group, and in the 55-64 age group men are twice as likely to own a pension
• being part of a couple appears to suppress pension ownership amongst women, as does having dependent children;
  27% of married women have a pension, compared with 47% of married men
• there are gender differences in behaviour and attitude to personal finance, with women more willing than men to remain loyal to a product provider with whom they have an existing relationship. Women also prefer buying financial products on a face to face basis, and are less comfortable using the internet for their banking; and
• demographic changes mean women are increasingly likely to have their own individual financial needs – the proportion of women who are economically active rose from 56% in 1971 to 73% in 2000.