Pension Freedoms Leave Women £50,000 Worse Off Than Men

Women are almost £50,000 worse off in retirement than men, says a new study.

Pension freedoms give women 37% less pension income a year than men – which adds up to more than £47,000 across an average retirement of 20 years.

Men retire with an average pension pot of £212,000, giving a £6,360 a year income at an annual yield of 3%.

But women only have a pot of £132,000, giving an income of £3,990.

If women want an income to match men, they would have to move their money into riskier investments yielding 5% a year.

Lack of investment advice

Women also have a longer life expectancy which means they must stretch less money over more years than men.

The reportDrawdown: Is it working for consumers? from life and pensions company Zurich shows only 59% of women moving their pension cash into drawdown had previous investment experience, compared to 71% of men.

Fewer women review their investments (17%) compared to men (10%), while more never check how their investments are performing (13% v 6%).

The study asked nearly 750 people about their experience with drawdown since pension freedoms were introduced in April 2015.

Zurich UK head of strategic partnerships Rose St Louis said: “Women already face barriers to securing a comfortable retirement income, and it’s no longer just down to the pay gap or career breaks.

Only 45% take financial advice

“Pension freedom has given people far greater choice in how they access and spend their retirement savings, but there are clearly unintended consequences emerging. For women, a small pot at retirement combined with a longer life expectancy means investing wisely is crucial.

“If customers are less engaged with their pension, then they are at risk of making poorer decisions that could result in a lower income, or even outliving their savings.”

The research also revealed less than half (45%) of retirement savers with funds in drawdown were consulting a professional financial adviser.

A third of these retirement savers had funds in drawdown of between £200,000 and £300,000, while just over a fifth (22%) had portfolios worth more than £500,000.

Women were five times as likely as men to rely on financial advice from their partners (22% v 4%).

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