"Gender drawdown gap" leaves women 37 per cent worse off in retirement than men

 
Josh Mines
Bank Of England Proposes Switch To Polymer Banknotes
Women in drawdown have around £2,370 less per year than men (Source: Getty)

Women in drawdown find themselves 37 per cent worse off on average than men, while the average pension wealth of millennials is in rapid decline.

Research out today suggested there was a significant gap between the pension income of men and women in drawdown.

Analysis by Zurich discovered that women in drawdown had on average 37 per cent less than men, leaving them £47,000 worse off.

Read more: Why auto-enrolment and pension freedoms are at odds

The average pot for men in drawdown was found to be around £212,000, while it was only £132,000 for women, which equates to an income of only £3,990 a year.

Zurich looked into the pensions of 750 people to compile its study, and also found that 41 per cent of women switching into drawdown had no investment experience, compared to 29 per cent of men.

Rose St Louis of Zurich UK stated:

Women already face barriers to securing a comfortable retirement income, and it’s no longer just down to the pay gap or career breaks. 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 smaller pot at retirement combined with a longer life expectancy means investing wisely is crucial. If consumers 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. For both men and women, the need for financial advice and guidance in retirement is greater than ever.

Millennial pension pots shrinking

For young people, separate research released today by Equiniti showed that, unsurprisingly, millennials have on average far less saved in their pension pot now compared to a few years ago.

Between the period 2010-12 and 2014-16, the amount people aged 25-34 had saved went down by around £700m, while the median pension savings held by the age group plummeted from £9,400 to just £5,000.

It comes following fears that due to rising rent, student debt and cost of living, many young people were opting out of pension schemes and could end up with limited funds towards the end of their careers.

“Passively following minimum contribution levels may not build up a pot big enough to secure the desired level of income in retirement," Chris Connelly, propositions and solutions director at Equiniti, warned.

"Millennials starting off on their pension saving journey should be encouraged to take a more active role in managing their pension savings so that they do not receive a nasty shock near retirement when it is too late to alter their habits."

Related articles