What women want their financial future to look like

This article is the latest from the Financial Times Financial literacy and inclusion movement

International Women’s Day should be a day of celebration, but as a financial journalist, I admit it’s often a day filled with fear. In terms of women's financial well-being and career prospects, how much real improvement has occurred in these 12 months?

Judging from Friday's depressing headlines, that's not nearly enough. First, MPs on the House of Commons Treasury Select Committee called out women in finance for “perpetuating sexism in the City of London” – a scandal that the Financial Times’ fearless investigative team has been uncovering for years.

It’s frustrating, although it does make me feel lucky to work with so many wonderful men (and women!) at the FT. We wrap up our work in this week's Budget, covering the Chancellor's last big fiscal statement before the next election, which thankfully has some words for parents struggling with the high cost of childcare The positive side (more on that later).

However, analysis of the tax cut by think tank Women's Budget Group shows that single men earn on average almost £500 more a year than single mothers, who are more likely to be in low-paid jobs and struggle to access affordable childcare. .

Astonishingly, the chancellor has invested more money in delivering flagship childcare reforms. But the sad truth is that doesn't help everyone.

“The UK childcare system is simply not suitable for low-income families,” Joeli Brearley, founder of campaign group Pregnant and Screwed, told the FT Financial Literacy and Inclusion Campaign made the blunt comment at the International Women's Day event. The proportion of income these families need to spend on child care makes working uneconomical, trapping them in a cycle of poverty, she said. If this government doesn't address the issue, she hopes the next one will.

“If you don't have granny day care, you have no alternative,” added panellist author and broadcaster Anna Whitehouse, who cited SunLife figures showing more than half of all grandparents are now in the working week.

Older women are more likely than older men to be responsible for unpaid care, exacerbating the impact of the gender pay and pension gap, which has been at the forefront of discussions on International Women's Day.

The White House launched the #flexappeal campaign to make working flexible for everyone. The possibilities this unleashes are one of the biggest positives of the pandemic. But doom is never far away – Boots is the latest company to reportedly reverse its flexible working policy.

The “erosion of flexibility” is also an issue – and it’s important to stress that flexible working isn’t just for women (or parents).

In our free-to-view webinars, we try to focus on the positive. Recruiters told the White House that if a company ends flexible work arrangements, they know it will be easier to attract top talent to work for companies that do so.

Other companies are also touting the virtues of flexible working, including Deloitte, which has produced information packs she likens to “top ace” cards that show how its employees work flexibly and enable new staff to ask about them during interviews. a little.

In my conversations with ministers about childcare, I see a complete narrative shift

Maike Currie, the architect of Hargreaves Lansdown's Financially Fearless campaign to attract more women to invest, stressed that employers are aware of such policies Benefits for employee retention. She believes investing in better childcare and flexible working will boost the UK economy.

“In the conversations I've had with ministers about childcare, I've seen a complete narrative shift,” Brearley added. “Five years ago they looked at me like I had two chocolate fingers stuck up my nose – why should we care about childcare? Now it's seen as a key battleground in the next election.”

I felt these sentiments during Chancellor Jeremy Hunt's budget speech on Wednesday. The Financial Times reported on the distorting effects of the £50,000 threshold at which child benefit begins to be withdrawn, including parents reducing their workload or refusing to work overtime to avoid the outrageously high marginal tax rates that would result from having benefits withdrawn.

By raising the threshold to £60,000 from April 6 and extending the cap to £80,000 for the highest earners, Hunt claims the child welfare reforms will lead to an increase in working hours equivalent to an increase of around £10,000. full-time workforce.

However, if you're one of the nearly half a million families now entitled to apply for something, you might be wasting your time with frivolous applications.

In a positive and cooperative spirit, HMRC helped me clarify the following regarding the claims process.

Only one parent can apply for child benefit. If one partner is out of work, it should be them as they will receive National Insurance Credit for their state pension.

The fastest way to apply is using the HMRC application. But you'd be wise to do this at or after the start of the new tax year, when the new child benefit thresholds come into effect. “If you make a new claim or elect to pay on or after 6 April 2024, the backdated payment will not be based on the 2023-24 threshold,” HM Revenue and Customs (HMRC) confirmed.

However, if you file a claim or elect to pay before then, you may incur a tax liability under the current system. This means you'll have to complete your tax return next year to repay the excess.

Please allow me one last moan. HMRC said a commitment to set up a system whereby wage-paid workers could repay excess benefits through the tax code was not yet ready and “further details will be announced in due course”. Therefore, you may need to complete tax returns in future years.

The tax authorities use your adjusted net income to calculate how much your benefits will gradually decrease. Simply put, this is your gross salary minus certain tax deductions and pension contributions (a detailed child benefit calculator is available here ). This means parents with higher incomes can use salary sacrifice to save more in pensions and keep more of their children's benefits.

The increased threshold comes into effect from April 6, when Child Benefit will also increase. Parents of their first child will receive £25.60 per week, with subsequent children receiving £16.95 per week – so for a family with two children this could be worth £2,212 per year.

I'd say it's worth the trouble – I hope this makes your life a little easier if you're juggling work and raising the next generation.

Claer Barrett is FT consumer editor and FT author Organize your financial life Newsletter Series; claer.barrett@ft.com; Instagram @kraalB.

FT Flic's The True Cost of Childcare webinar is free to watch for the next 90 days if you Register here.