The high earner gender pay gap is starting to close, as the number of women earning £1 million or more has doubled in the last five years.
Financial advisory firm Salisbury House Wealth says that in the most recent tax year there were 1,400 women earning over £1 million, up from 700 in 2010-2011.
This means that 9.2% of those who earn upwards of £1 million are now women – clearly a step in the right direction when compared to only 7% five years ago.
Additionally, 21% of people earning between £100,000 and £249,999 are women, up from 18.6% five years ago.
These increases reflect the increasing prioritisation of diversity in top corporate positions, as well as the growing number of self-employed women. According to Salisbury House Wealth, there are now 1.6 million self-employed women in the UK, compared to 1.2 million in 2011.
However, Salisbury House Wealth says that there is still a long way to go before equal pay is achieved, as was highlighted by the recent disclosure of the BBC’s top earners list, in which it was revealed that only a third of the organisation’s highest paid stars are women.
Tim Holmes, managing director at Salisbury House Wealth, says: “There’s clearly still a long way to go to close the gender pay gap but this is an encouraging sign that women are beginning to catch up. More and more women are seeing their earnings power accelerate as moves to increase numbers of women in top positions pay off and as we see rising levels of entrepreneurship amongst women.”
Women need to plan for ‘missing’ working years
Salisbury House Wealth also warns that since women are overall more likely than men to take time out of their careers, careful financial planning to maximise savings and pension pots are particularly critical in order to make up for ‘missing’ years or long periods of time in which there has been a reduced focus on career.
Unfortunately, due to the cap on annual tax-free pensions, Mr Holmes says high earning women “may find it harder to build up sufficient retirement savings because their ability to put away significant lump sums is limited.”
The Government capped the amount of money individuals can put in their pension at £40,000 per year - but for those earning over £250,000 this is capped at just £10,000 per year.
Mr Holmes goes on to say: “The annual Isa limit also disadvantages people who have been less able to save regularly year by year – often women have to cram their saving for retirement into a smaller number of years. This means more women are going to have to invest more in Stocks and Shares Isas and less in Cash Isas in order to generate the higher returns needed to build their pot up for retirement.”