The gender pay gap and poor retirement outcomes

Emma Heap
As new regulations in the UK tackle the gender pay gap, Emma Heap, head of retail at 10X Investments, says enduring pay inequality between men and women is one of the reasons so many women in South Africa are not able to retire comfortably.

New regulations in the UK require that all companies with more than 250 employees report their gender pay gap to the Government Equalities Office by April this year. This shift towards greater transparency will likely put pressure on companies to pay their female and male staff more comparable wages.

The problem is far from unique to the UK, however, and South African women face similar, if not worse, struggles. The 2017 Pulse of the People report run by market research firm Ipsos found that, on average, women in South Africa earned 27% less than their male counterparts. The same report, which surveyed more than 3 500 employed South Africans across various occupations and regions, found that this gap becomes even wider when looking at top earners, where South African men are earning as much as 39% more than women at a similar level.

Recent survey findings released by 10X Investments revealed that 32% of female South Africans feel vague and unsure about their retirement plan; men were almost 10% more clear on their long-term investment and savings plan.

Heap says that the correlation between the gender pay gap and poor retirement outcomes for women is complex, with key empowerment issues such as these being mutually reinforcing.

“The wage gap may go some way to explaining why so many South African women are not prepared for retirement when the time comes around,” she says, adding that the two are part of a vicious cycle of sorts.

“Providing for retirement, frequently left to male partners in a relationship, is a classic empowerment issue,” says Heap. “Not being dependent on someone else for financial planning is very liberating. The same goes for knowing your future is taken care of.”

She continues: “No one cares more about gender equality than women. We have to stand up for ourselves and our rights.”

“As everyone knows, rights and responsibilities go hand in hand. Preparing for retirement is each individual’s responsibility.”

Heap says that getting involved in the family’s long-term financial planning is often a key step in a woman taking charge of her life. “Women must believe in their ability and the value they can add at all levels of life.”

After all, she says “women naturally take charge of many key, complex family decisions, such as the household budget, what the family eats, and where the children go to school”.

“There is no doubt that women are more than capable of understanding how to save for retirement.”

Besides, she says, retirement planning is actually not that complicated and does not require the services of various “experts”, all of whom charge a fortune for services or advice.

“Following 10X Investments’ simple retirement formula is probably easier than doing a meal plan for a large household, and much less stressful than negotiating curfews with teenagers,” Heap adds.

According to the 10X formula, investing 15% of your salary for 40 years in a high equity fund and paying less than 1% of it away in fees will ensure a decent retirement.

“Many women – and to be frank, a lot of men too – have been brainwashed into thinking they couldn’t possibly make the right choices for themselves without expensive advice. This is just nonsense,” says Heap.

“Most people who have a role in running a household will already be familiar with a lot of the pitfalls on the retirement savings journey, being ripped off by salesmen who seek to confuse and scare you surely being high on the list.”

Heap’s advice to women is to take control of key areas of their lives, such as planning for retirement.

“There is no better moment than now to start planning for then. Don’t believe anyone who tells you your life and future is too complicated for you to manage,” says Heap, adding: “Retirement planning is largely about sticking to a simple plan and making sure you get the best value for your money/savings over the long-term.”

She urges women to take advantage of the simple, easy-to-use calculators on the 10X Investments website to “help you understand your financial situation better and to develop a plan for achieving your investment goals”.