Women in drawdown face a 37% shortfall in their annual retirement income compared to men, resulting in them being over £47,000 worse off, according to report, Drawdown: Is it working for consumers?, from Zurich UK.

The study further warned of a potential new gender gap in drawdown, including factors such as lack of advice for women and placing them more at risk of outliving their savings.

The report revealed that men in drawdown have an average pension pot of £212,000, which coupled with a 3% yield provides an annual income of £6,360, whereas women have an average pension pot of £132,000. This equates to an annual income of £3,990 meaning that women have £2,370 less per year and would need to identify riskier investments with a 5% yield to match the retirement income of their male counterparts.

Furthermore, a longer life expectancy means that women need to stretch their smaller pension pot over a longer period of time and, as a consequence, women retiring at 65 can expect to receive £47,400 less income over a 20 year retirement.

The report is the first of its kind to explore the impact of drawdown on just under 750 people since the pension freedoms was introduced, and reveals the potential emergence of a new ‘gender drawdown gap’. It further found that 41% of women switching into drawdown lack investment experience, compared to 29% of men, whilst 17% of women are less likely to review and adjust their investments in drawdown and 13% admit that they never check the performance of their portfolio.

Zurich UK Rose St Louis commented: “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.”

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