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LGBT+ Month – How to tackle pension inequalities

LGBT+ History Month takes place in February each year. It is an opportunity to raise awareness and advance education on matters affecting the LGBT+ community. 

At My Pension Expert, we wanted to seize this chance to discuss some of the common challenges that members of the LGBT+ community face when it comes to their finances. This includes pay disparity and retirement planning – two issues that need addressing.

The pay gap and its consequences

Research conducted by LinkedIn and YouGov in 2019 found that LGBT+ professionals are, on average, paid 16% less than their straight colleagues – that is the equivalent of £6,703 per year. 

While being a significant issue in itself, the lower salaries typically earned by those in the LGBT+ community will inevitably have further, serious knock-on effects. Namely, lower salaries will result in smaller monthly pension contributions, damaging people’s chances of achieving their retirement dreams and financial security in later life – sadly, it is a story all too familiar when looking at the gender pay gap.

Financial inclusivity and support

But it is not only a question of salaries and the value of savings. One of the major issues affecting the LGBT+ community is financial inclusivity. 

For instance, data from a specialist LGBT+ insurance firm states that 68% of customers within this community feel that their financial services provider is not taking steps to understand them or their needs, while over a third (34%) have experienced an uncomfortable situation with a financial services provider because of their sexuality. 

Whether it is the products offered, the language used, or the way services are marketed, if the LGBT+ community does not feel comfortable in engaging with the financial services sector, they can quickly become alienated from crucial support systems. Financial advice is a prime example. 

Financial advice has a critical role to play in enabling anyone to effectively manage their finances and plan for the future. Without it, people can be left in the dark about important financial issues. This is evidenced by research from Aegon, which revealed that 43% of LGBT+ employees in the UK do not understand financial matters related to retirement planning.

Improving access to advice 

Clearly, employers and the financial services industry – including the pension sector – must come together and do more to better understand the financial needs of the LGBT+ community. Bridging the pay gap and ensuring a more inclusive financial services market is of utmost importance.  

In the current climate, as the cost-of-living crisis rages on and interest rates rise, we are seeing that it is challenging for everyone to create long-term financial plans; our latest research has demonstrated that. For those who feel alienated from financial advice, this problem becomes yet more serious.

At My Pension Expert, our mantra is simple: independent financial advice is for everyone. We do this by ensuring all our advice is accessible and free from jargon. We take the time to understand an individual’s circumstances, needs, and their retirement ambitions. Then, we can curate tailored advice for them – if that advice is not taken, the client does not spend a penny.

LGBT+ History Month 2023 is another important opportunity to tackle pension inequalities, and we hope the industry will rally together to provide more resources, education, and support to the LGBT+ community. Now more than ever, we must champion the importance of independent financial advice and ensure it is available to all who require it.