How engaged are you with your pension? Your answer could well depend on your gender, with new research from Fidelity International showing that women are far less likely to review their pension investments or know their expected income at retirement – which means many could be in for a shock when they approach retirement.
The research found that 27% of women surveyed don't know the value of their pension pot or how much income they're likely to receive in retirement, a figure that is almost twice as high as men (15%). Similarly, women are also more likely to review the performance of their pension pot and underlying investments fewer than once a year, which shows how little focus they have on the financial performance of their funds.
However, this could put them at a clear disadvantage when their retirement date looms, with the average annual retirement income for women expected to be around £18,334 – nearly £5,000 less than that of their male counterparts. It seems that financial performance is less of a motivator when it comes to consolidating pension pots, too, with 44% of women surveyed saying that the key driver to consolidate was to have everything in one place, while for men it was all about performance (at 52%, compared with 20% for women).
Surprisingly, this lack of engagement doesn't mean that women are more likely to seek professional advice – in fact, it's the exact opposite. Indeed, 24% of women said they found the financial planning process difficult (compared with 16% of men), which could explain why 21% prefer to seek advice from family and friends (vs. 13%) and why only 36% have sought independent advice, compared with almost half (46%) of men.
Maike Currie of Fidelity International points out that the pension savings 'gender gap' is well-documented and largely the result of "historical differences in working patterns", with the gap widening with age as a result. However, "it is also driven by behavioural differences", said Maike, "with the research pointing to women generally being less engaged with their finances and more risk averse".
This is particularly concerning given that women are generally expected to live for longer than men, which means they'll need more pension savings to accommodate the extra income requirements. Not only that, but Maike points out that "an increasing number of women are now single and/or divorced in later life and cannot, even if they chose to, rely on a partner for an income in retirement", which means women should ideally be even more focused on building their own, independent, pension savings.
"The basis of good pension planning starts with knowing how much to expect in retirement and it is vitally important that women, whatever their age, engage with this, rather than burying their heads in the sand," added Maike. "Women building up a pot today should invest and have financial plans in their own right. If you are time-poor and finding it challenging to make time to plan for your retirement, it could be prudent to seek high quality expert help."
Get engaged with your pension! Start by reading our pension and retirement guides to get an overview of the basics, and make sure to take a closer look at your pension statements when they arrive each year. Don't be afraid to seek professional advice, either – it could make all the difference to your eventual income, and in turn, your comfort in retirement.
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