Why couples have to work together to close the pay gap - Sarah Coles

This is according to the Fawcett Society, which has calculated that because women earn so much less than men on average, it takes women all year to make as much money as men make by November 18.

And while this is a blow for women, it’s not just us who are affected. It isn’t something where one half of the population is pitted against the other half, because we’re all victims of the pay gap. In most households, women and men work together to pay the bills and save for the future. So if the woman is being underpaid and overlooked at work, then the whole household is suffering.

Everyone should have enough savings to cover three to six months’ worth of essential expenses in an easy access savings account while they’re working age, but 28 per cent of women say their savings would last less than a month if their income stopped, and half of women would last less than three months.

Women are also less likely to invest. Our research shows that 70 per cent don’t have any investments – compared to 59 per cent of men, and when asked why they don’t invest, 49 per cent of women say they don’t have enough money. We have smaller pensions too. While women start out making similar contributions to men, over time the gap opens up, so that by the time they get to retirement, women are facing worrying shortfalls.

This affects everyone in the family. It means that if a crisis hits, if nobody else in the household has the savings to cover expenses, everyone will suffer. It also means that in retirement, men will often need to take responsibility for more than half of the household expenses.

The long-term solution involves societal change, to close the pay gap for good. But in the interim, we can all take steps to mitigate its effects.

The pay gap opens up from 3 per cent before the age of 40 to 12 per cent afterwards. In some cases, it’s when people have second or subsequent children and decide to have a career gap – either because of the cost of childcare or because they make the decision to do so.

Alternatively, this gap can open more gradually as women make career compromises over time. The ONS found women are more likely to give up a job in order to work closer to home. They’re also almost three times as likely as men to work part-time.

It means when we’re considering starting a family, we need to have serious conversa-tions about parenting roles and childcare. If one of you ends up taking on the majority of the caring responsibilities and takes a career gap, works part-time, or finds a job closer to home, this should be an active choice.

If you both want to continue working in your current roles, you both need to consider how you’ll cover the cost of childcare. You may also want to talk to your employer about options for flexible working.

If one of you takes on the lion’s share of caring responsibilities, then you need to discuss the long-term financial impact, including pensions. Each couple will come to their own conclusions about the best way forward.

If you currently aren’t working, your partner can contribute up to £2,880 into your pension and the Government will top it up to £3,600 in the form of tax relief. This enables both partners to continue pension saving in their own name throughout any career gap. If you’re working part-time, you should have a conversation about how you divide household expenses so there’s still room for pension contributions for you both.

Some couples decide that the parent who isn’t taking a career break, or the higher earner, will increase their pension contributions to make up for a shortfall in their partner’s. In some cases, if they’re a higher-rate taxpayer, they will be able to get more tax relief.

However, this comes with risks. If you make this decision, you need to be clear that income will need to be split fairly on retirement. If you have very different approaches to money, you need to be clear from the outset how you will manage the imbalance in income.

In the event of divorce, you both need to consider your pension position. If the larger pension ends up in the hands of one of the couple, the other will need to think very carefully how they will be able to afford to retire. If you aren’t married, meanwhile, the person with a smaller pension will have no right to a share of the larger one if you split up.

If it’s too late for advance planning, it’s not too late to do something about it. Have a conversation about catch-up pension payments. It may be that the person with the smaller person needs to focus on putting money into their pension for a period, so their partner may need to cover more of the household expenses while they do so.

We can’t afford for the gender pay gap to be a woman’s problem, or for it to be something that’s blamed on men. We’re much stronger together, and when we work with our partners, we’re much more likely to find the solution that works for everyone.

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Thank you

James Mitchinson