June is internationally regarded as LGBT+ Pride month, so International Adviser set out to shed light on some of the issues the community faces when it comes to dealing with their finances.
In this article, we look at how difficult it can be for people in the community to build up a big enough pension.
It is not uncommon to hear about gay men, in particular, who grew up in the 1980s during the HIV/Aids epidemic and cashed in their savings and/or pension because there was a belief that they wouldn’t live to retirement.
Medical advances now mean that those living with HIV/Aids have comparable lifespans with those who don’t.
Others in the LGBT+ community have reported feeling unwelcomed by the financial services sector; uncomfortable with disclosing details of their personal lives to life insurers and pension companies – some failing to list their partner as a beneficiary for fear of encountering discrimination.
But that was then. Things must be different now, right?
Inequality
According to Fran Bailey, partner at advisory firm LCP, the LGBT+ community faces two major obstacles leading up to retirement: labour market position and the impact of family responsibilities.
She told IA: “In terms of wages, there is some evidence from YouGov that that LGBT+ employees, on average, take home lower salaries than their heterosexual counterparts.
“A number of cross-country studies have also highlighted that these differences differ across the LGBT+ spectrum, with lesbians tending to have higher wages and gay men lower wages on average than their heterosexual counterparts, whilst the income gap between trans people and cisgender people is even further apart.
“With respect to family roles, caring for a child can often impact on the pension prospects of a parent through breaks from paid work. In the past, where it was perhaps less common for LGBT+ families to be bringing up children, this factor would have less impact on their pension prospects.
“But for the younger generation, with growing numbers of LGBT families with children, an unintended consequence may be to make it harder for them to build up as much pension as in the past.”
Business opportunity
The advice sector – and financial services industry more broadly – still has a reputation for being ‘pale, male and stale’.
And the expectation that the industry will be unwelcoming – whether that is accurate or not – has put people within the community off from saving for their retirement.
Greater workplace equality and an improving inclusion environment should close the earnings gap over time. Albeit not as quickly as needed or wanted.
Growing numbers of young people from across the sexuality and gender identity spectrum are working in financial services, which should give the industry a more welcoming feel.
But for the older generation, which may be less financially secure, the message needs to be that it is never too late to start saving for your retirement. And helping get that message across is where the financial advice sector can really prove its worth.
