Disadvantages of Women in Long-Term Financial Planning

Women face several financial disadvantages in long-term planning, including gender pay and pension gaps, saving gaps, high levels of debt, and lack of knowledge and confidence in long-term financial strategies.

PART A
1. a. The following table gives the probability (in decimal and four decimal point) of rates1
of police recorded crime (selected offence groups and selected areas of England and
Wales), year ending March 2017.
Area Theft offences Criminal damage or Arson
Greater Manchester 0.0415 0.0135
London metropolitan police
area
0.0431 0.0072
Devon and Cornwall 0.0172 0.0081
South Wales 0.0297 0.0104
The ranks of the regions of theft offences in the decreasing order is; Greater Manchester
followed by London metropolitan police area then South Wales and finally Devon and
Cornwall.
b. Chances of suffering in case of theft and criminal damage or arson
Chance of suffering in case of theft in one year;
¿ 0.0297
0.0415+0.0431+0.0172+0.0297+0.0135+ 0.0072+ 0.0081+ 0.0104
¿ 0.0297
0.1707
¿ 0.0016 %

Chance of suffering in case of criminal damage or arson in one year;
0.0297
0.0415+0.0431+0.0172+0.0297+0.0135+ 0.0072+ 0.0081+ 0.0104
¿ 0.0104
0.1707
¿ 0.0006 %
c. Incidence of theft in London and Devon and Cornwall
The probability of theft incident occurring in London is 0.0431 while the probability of theft
occurring in Devon and Cornwall is 0.0172.
Incidence of criminal damage or arson in London and Devon and Cornwall
The probability of criminal damage or arson incident occurring in London is 0.0072 while
the probability of criminal damage or arson occurring in Devon and Cornwall is 0.0081.
The probability of theft occurring in London is higher compared to theft occurring in Devon
and Cornwall therefore the people in London will pay more premiums in covering theft

compared to premiums paid by those people in Devon and Cornwall while the probability of
criminal damage or arson occurring is slightly higher in Devon and Cornwall than the
probability of criminal damage or arson occurring in London. This means that those in
Devon and Cornwall will pay more premiums in covering criminal damage or arson
compared to those living in London and covering the same criminal damage or arson. (S.,
2011)
d. i) Moral hazard. Moral hazard is where on party, mostly the insured, involves in an event
which is very risky and they know they are protected against it and the other party, insurer,
will incur the cost of the risk. Moral hazard can increase the incident of car theft or from a
car when the insured exposed the car to areas or regions known to stealing of cars. They can
easily leave their car unattended in dangerous zone with the knowledge that they are covered
and the insurer will incur the cost just in case the car is stolen. (Sydykovych, 2015)
ii) The insurers can reduce moral hazard by penalizing bad behavior. They can do this by
prosecuting those found in fraud to mitigate loses to moral hazards.
Good claim merits from areas. By monitoring relative severity and frequency of losses to
determine the existence of moral hazards in some areas.
e) Behavior of more informed partners in a contract against the less informed partners bring
about the adverse selection. In health insurance, more healthy people will always go for
managed care insurance plan while less healthy people will chose general health insurance
plan. The healthier people will go for the managed because they are trying as much as
possible to remain the way they are whereas the less healthy ones will go for general so that

any health issue come their direction can be taken care of by the insurance company.
(KOVTUN N, 2010)
1. Xanthe’s and Yalouris’s options for employment and childcare
Weekly table
Weekly Option A Option B Option C Option D
Hours of
employment
(Xanthe/Yalouris)
0/40 20/20 20/40 40/40
Hours of
childcare to pay
0 0 21 41
Childcare cost 0 0 147 287
Yearly table
Tax and National insurance calculator
Yearly Tax fee
allowance
Total
taxable
Tax
paid
National
insurance
Total
deductions
Net per
year
Childcare cost 0 0 0 0 0 0
Gross
earnings
Xanthe
0 0 0 0 0 0
Gross
earnings
Yalouris
16432 11859 4573 915 960.96 1875
Gross
earnings total
16432 11859 4573 915 960.96 1875
Net earnings
Xanthe
0 0 0 0 0 0
Net earnings
Yalouris
14453
Net earnings
total
14453
Child benefit 1,076.40
Working Tax
Credit
675.08
Working Tax
Credit
0 0 0 0 0 0

childcare
element
Child Tax
Credit
3325.00
Total net
income
19529
Total after
childcare
19529
Using the tax credit calculate
Based on the details, child tax credit is £92.43 every four weeks toward household cost,
childcare element is £0.0, every four weeks, working tax credit is £0.0 every four weeks
these based on the household income of 34,985.72
b. Best options
Weekly Option A Option B Option C Option D
Hours of
employment
(Xanthe/Yalouris)
0/40 20/20 20/40 40/40
Hours of
childcare to pay
0 0 21 41
Childcare cost 0 0 147 287
The best option for the family to take here is option D. Option D will 41 hours of childcare
pay and childcare cost of £287 and also enough time per week to make enough money for the
family. The other benefits which accompanies the option D is that the number of hours of
childcare doubles but child care cost is slightly lower when you double option C. (Mo, 2000)
c. When the salaries of Xanthe and Yalouris is increased that is £10 per hour and their total
hour per week is 60 hours meaning they will be earning their total earning will be £600.
There will be increase in their salary £31200.

The following is how the household will be paying taxes on their new set of salary.
The tax free allowance will be £11859, total taxable £19341, Tax paid £3868, National
insurance £2733.12, Total deductions £6601.32, Net per year £24,598.68.
PART B
How woman are disadvantaged relative to men in their long-term financial planning
The finances of women are always at a disadvantages due to a lot of reasons especially in the
long run. There are some unique financial issues affect women and are very important to discuss.
Some of the obvious issues we can generally observe are the gender pay gap and the fact that
there is a possibility that women are likely to take some career leave just to take care of the little
ones and even the elderly parents.
Talking on the women financial disadvantages that may make them not catch up with men we
are going to consider in detail the; the gender pay and pension gap, the tendency of women to
save less, high level of debt in women, employment policies affecting them. ( (Glass, 1998)
(Lusardi, 2008) (Financial planning: Seminar on financial planning for CADCAM and CAE
installations, 21st March 1985, BCS Headquarters, Mansfield Street, London, UK, 1985)
The gender pay and pension plan.
The fact that gender pay gap for full-time employees in 2016 was 9.4%, means that the average
female pay for full-time employment was 9.4% lower than for full-time male employees. The
gap for all employees (full-time and part-time) was 18.1% in 2016. Women also make up a
bigger proportion of those reporting working on ‘zero-hours contracts’ (52%) compared with

women in employment not on ‘zero-hours contracts’ (47%). These factors forms the poor basis
of the financial planning in the long run
The likeliness of women to miss out on pension increase the chances of being poor at the old
age. This is contributed by the fact that most of them, three quarters are missing the chance or are
being excluded from auto-enrolment into workplace pension due to the fact that most of them
earn less than £10000 threshold. This has caused the pension inequality between men and
women. (Glass, 1998) (Strazdon, 1983) (Fisk, 1980)
Another factor contributing to the gender pay gap and pensions is the fact that, women’s lifetime
in career is disrupted most of the time and it is not supported by the auto-enrolment in the
workplace. These disruption always come when they take break for taking care of children,
taking care of the elderly and they are mostly affected when the family moves to a different
location. The latter can even cause them to forgo their currents jobs completely. This is though
disproportionately, but it is due to the fact that it is caused by low earnings of women. This has
caused them not to meet the eligibility criteria with almost a third. Unless these factors are not
changed, these discrepancy will always fuel the inequality in pension. (Glass, 1998) (Marc H.
Goedhart, 1995)
Women are believed to save less.
Close Brothers Asset Management in conjunction with the Pension and Lifetime Savings
Association conducted a survey that showed that far less women are likely to make savings, but
saves into a pension. The Close Brothers’s head of financial education Jeanette Makings says
“The saving of crisis is thrown in stark relief when looked under the lens of gender imbalance”

It is seen that due to the fact that women earn less, there is a significant relationship between
earning less and saving less. This has contributed on the factors why women are seen to save
less. Choosing what’s best for them and being that they are less confident on the saving options
available has made them to also save less compared to their counterpart, men.
The saving gap between women and men is seen to be wide compared to the salary average gap
between the two. The women surveyed shown that the mean annual salary is £27379 compared
to £37655 for men which nearly just 30% less. This has been perceived as recklessness on the
side of women by some financial analysts.
Superannuation savings between men and women, a part from pay gap discussed earlier, it can
be contributed by the factors such as more women frequently participating in lower paid
industries and jobs, women participating in disproportionate part-time and casual positions and
fragment patterns due to pregnancy leave and unpaid care. (Orel, 2004) (Susanne Dirks, 1995)
Level of debts
An initiative from the Chartered Insurance Institute, on a report from Insuring Women’s Futures
shows that debt of student almost doubled between the year 2001 and the 2017. Though it is
shown that all the genders are likely to take a loan, but women are less likely to repay their debts
even if time is allotted of thirty years since they earn less compared to men. The report also
indicate that women will take thirteen more years than men to clear their debts making it even
harder for them to save in future.

The level of consumer debt in young women is even increasing. Women aged 24 and under had
their debts increased by almost 10 times the rate of general population between the year 2006
and 2012. (Mitchell, 2008)
Depending on other for financial security
When the women have children or during the care of an elderly, they tend to rely on the
breadwinning partner for the purposes of financial security. This has affected some women since
some marriages do not last hence they get affected in case they forfeit their jobs with the
assurance that their partners will take care of them. (Lusardi, 2008)
Lack of knowledge and confidence for long term financial strategies
Financial literacy for implementing, budgeting and saving strategies for short term investment,
our young women has shown to be confident, but lack the knowledge and confidence in
implementing long term financial strategies. How to use the understanding on how money
works, and how to make and manage money of the affairs of day to day in a future preparation
major aspect than just to understand how money works. There is a link between social,
institutional and personal attitude toward financial knowledge. When survey was conducted on
the knowledge and confidence in financial strategy for the long term, 91% were confidence on
their implementing strategies while 81% were confident in the ability to budget. However,
majority expressed their lack of strategy for long term financial goals as only 23% showing less
interests in long-term investment.
High rates of homelessness experienced by older females has been associated with insufficient
superannuation at retirement. Though homelessness can be linked with drug abuse and alcohol

abuse and even lack of proper housing, study also shows that poor financial literacy is a
contributing factor. (McGRATH, 1997)
Higher life expectancy in men compared to men
Women in most place tend to have higher life expectancy compared to their counterpart for
example, the life expectancy of women in India is 69.9 years compared to men with 66.9 years.
If for example the retirement age is 60, the retirement corpus for women should be higher than
that of men. Since women work few years contributed by maternal leave, save less, are paid less
the more years they take after retiring make them even more disadvantaged in the long-term
financial strategies. On average, they spend about seven years away from work which means
they are not saving anything during that time. The fact that they mostly live alone after they have
been left by their spouses even make the situations even worse. (Grable, 2011)
Poor bargaining at the workplace
Some women find it difficult to bargain for the increment at the workplace. This make them to
work for a very long time without a proper saving for future benefits. The idea of requesting for
a higher salary when you change the job is majorly taken by men, who find their way to bigger
salary hence help them to save as they work. This should be taken up by women because it not
only increase your retirement corpus, but it can also increase your retirement benefits later on
when you retire. (E&Y financial planning program can help sell insurance, 1998)
Working for fewer years
Since the women have been confirmed to higher life expectancy, they can live 15-20 years after
retiring. This means that they can plan, as they work, on their future carrier after retiring. This
will enable the retirement transition to be smooth and for the retirement corpus to last longer

since it will have something to compliment it with. Though nice with a lot of benefits most
women tend to concentrate on their current job without thinking on how the after retirement will
be. This has led many women facing a lot of challenges especially when they live long after
retirement. The diseases which come due to old age knocks at such moment, but due to the fact
that there was no proper after retirement plan and maybe there was no medical insurance, getting
money for treatment can be very difficult. (Xiaodong Xu, 2006)
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