business
THE PERSONAL FINANCE GAP
BY KLEINWORT HAMBROS BANK
R
ecently, there has been greater focus on the ‘gender pay gap,’ accompanied by the (if somewhat gradual) realisation that this is not fair, productive for business or acceptable. However, within the world of wealth management, there still remains a ‘personal finance gap’ between some couples. If one party’s career has generated a larger share of a couple’s combined wealth, this person sometimes takes greater responsibility for making financial decisions, thus taking greater ownership of collective finances. The extent of any personal finance gap varies across generations and jurisdictions. Historic exclusion from the financial sector has an enormous impact, taking the UK as an example – after all it was not until the 1975 Sex Discrimination Act that discrimination against women seeking to obtain goods, facilities or services, including loans or credit, was finally made unlawful. Marital status has also had an 22
enormous impact on women’s personal finances. Until April 1977 in the UK, married women could choose to pay a reduced rate of National Insurance contributions, known as the ‘married women’s stamp’ (see: gov.uk/reducednational-insurance-marriedwomen). What may initially seem like an advantage in fact did quite the opposite, affecting married women’s entitlement to state benefits based on National Insurance contributions. Notably, these reduced-rate National Insurance contributions did not count towards qualification for the state pension.
Any wealth management guidance should reflect position and priorities. Furthermore, the full independent taxation of married women was only introduced in the UK in 1990. Prior to this, the underlying
principle was that a married woman’s income was simply part of her husband’s income. It may seem inconceivable to a modern reader, but the Income Tax Act 1918 actually categorised married women as incapacitated persons, alongside “infants, lunatics, idiots or the insane.” This categorisation was not removed until 1950. Other factors which affect the personal finance gap include belonging to a generation for whom women’s career opportunities could be limited or less well-paid. Equal pay has only been an aspect of UK sex discrimination law since 1970. Statutory maternity leave for all women was not introduced until the Employment Relations Act of 1999. Thankfully, over recent decades there have been marked improvements in the contractual working conditions and opportunities for women - but does personal financial awareness reflect this change or address any lingering imbalances? Is it possible that female wealth planning needs are being compartmentalised into GIBRALTAR MAGAZINE OCTOBER 2020
