By Henrike Hein, March 12, 2023
One in three women in Germany is expected to have a pension of less than 1,000 euros net after 40 years of full-time work.
This was announced by the Federal Ministry of Labor at the beginning of the year in response to a question from the Die Linke party. According to this, around 2.7 million women are affected by potential poverty in old age. The reasons for this are that, on the one hand, women still earn less than men with the same qualifications: at the end of January, the Federal Statistical Office published the figures for the Gender Pay Gap 2022, which showed that women in Germany earned an average of 18% less per hour than men. In part, this is because women are still more often employed in lower-paid jobs. But the adjusted gender pay gap, i.e. the comparison of wages of women and men with comparable qualifications, occupations and employment histories, is also 7%. Another reason is the so-called gaps in employment that arise, for example, due to pregnancy and care work (which unfortunately is still traditionally done by women). These periods are still not adequately taken into account in pension provision. High inflation then contributes further to dimming the prospects of women having enough money in old age.
The answer is: invest! Although interest rates are currently no longer negative, they are far from sufficient to protect assets. The inflation rate in January 2023 was 8.7%, and the key interest rate in February was 3.0%. This still results in 5.7% by which assets are reduced - not in absolute terms, but in value. To counteract a meltdown of one's own assets, investments are needed that can keep pace with the inflation rate, at least in the long term. Interest-bearing savings deposits are therefore out of the question. Investments on the capital market are still attractive: Investments in funds or shares are the investments with the highest potential returns. Of course, these investments are subject to high fluctuations and can also mean high losses. To minimize the risk, it is important to invest for the long term and to wait for phases with low prices. In order to be able to do this, money should be invested that is dispensable and, for example, will only be needed in old age. If the solution is so simple, the question arises:
A representative study by the market research company Puls on behalf of a private bank has shown that every second woman is currently not investing any money at all. The reasons for this are fear of losses and shyness about investment topics. In addition, women rate their financial knowledge significantly lower than male respondents. This also seems to explain why just 22% of the women surveyed who invest their money at all invest in equities. The proportion of female fund savers is still 42%. Overall, it was found that women are twice as likely to be financially dependent on their partner than the other way around. All this means that the stock market tends to be male-dominated. It is therefore not diverse enough to reflect the interests of society.
Investments provide companies with financial support. They can expand, gain power and influence. It is therefore worthwhile to think carefully about which companies should be given this influence. Do we agree with the business model and also the business practices? The voting rights of investors, who can directly influence important decisions in the company, should also not be ignored. Not all investments that promise a good return are also valuable to society. Examples of this are arms manufacturers or oil and gas companies. A representative Forsa study on German investment behavior showed that women prefer sustainable or socially oriented investments. They want to do something good with their investments and see this as an opportunity to take responsibility for society. If more women were represented on the financial market, this could have a positive impact on demand for sustainable investments in particular. This in turn would drive sustainable development and thus benefit society as a whole. Investments by women in the capital market are therefore worthwhile not only for their own protection, but for all of us!