British women are on track for a worse retirement outcome than men, largely due to a lack of knowledge of pension options, research has found.
According to a recent YouGov survey of 2,058 UK adults, commissioned by Pension Potential (part of Punter Southall), 44 per cent of women admitted they had no confidence in their financial security in retirement.
This compared to 31 per cent of men who had no confidence.
The research also pointed to a significant “annuity blind spot”, citing a gap in understanding around how annuities can help to provide an income in retirement.
The 12-page report, ‘The Annuity Blind Spot: why UK retirement security is at risk’, was commissioned for National Annuity Day.
The awareness day today (October 21), is an initiative created by Pension Potential and backed by Aviva, L&G and Standard Life, and designed to help boost Britons’ understanding about retirement options.
By educating the public and supporting advisers, we can help people see annuities as a practical, low-risk way to boost retirement income
According to the report, a lack of knowledge about annuities reflected a broader trend in the pensions industry, with women set for a worse overall retirement outcome.
For example the research said 15 per cent of women do not have any private pensions, compared to 9 per cent of men.
The research also suggested that the quality of financial advice may be a barrier to women achieving gender-based pension parity.
The research said: “Women are more likely to purchase an annuity based on the recommendation of an adviser, whereas men are less likely to rely on an adviser.
“This has important implications for the gender pensions savings gap, which is why it may be prudent for advisory firms to consider offering tailored financial advice strategies for women.”
Steve Butler, managing director of Pension Potential and founder of National Annuity Day, said that, overall, a lack of knowledge about the product may have prevented people from investing in annuities:
“Many over 50s are seeking comfort, stability and predictability, exactly what annuities are designed to provide, but understanding of these products is low.”
Fixing the knowledge gap
Coinciding with National Annuity Day, pensions provider LV also published research that showed only one in 10 Baby Boomers (aged 61 to 70) have considered purchasing a lifetime annuity, compared to just 8 per cent of Generation X (aged 45 to 60).
LV’s research showed just 6 per cent of both generations have considered purchasing a fixed term annuity.
This also highlighted a potential knowledge gap among those closest to or already in retirement, a gap which financial advisers can help close.
A separate report from US Alliance for Lifetime Income, cited in the Pension Potential research, said 60 per cent of woman and 44 per cent of men said they had not discussed annuity options with their financial adviser.
Therefore, Butler said financial advisers were a huge part of the solution to getting Britons back on track with their pension pots.
He said: “By educating the public and supporting advisers, we can help people see annuities as a practical, low-risk way to boost retirement income.”
Recent growth
There was encouragement in the Pension Potential research, which showed annuity sales increased by 34 per cent to £7bn in 2024.
However, separate Gov.UK statistics have shown that total annual workplace pension savings for 2024 amounted to £149.7bn.
So there is still some way to go before there is a wider take-up of annuities, the report suggested.
Five ways to tackle the retirement savings gap
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Emphasise the value of a blended approach to pension savings
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Publish data on the gender differences in participation rates and annuity payments to raise awareness
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Highlight the fact that women have longer life expectancies
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Emphasise that annuities can be a good match for people with lower risk appetites
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Encourage financial advisers to offer strategies that are tailored to women
Therefore, the research recommended emphasising blended pensions savings and promoting annuities for people with lower-risk appetites.
As reported earlier this year in FT Adviser, there are different types of annuities to suit different retirement needs.
Back in July Standard Life’s head of annuities, Pete Cowell, said: “What’s important to remember when considering annuities is that there are different types of annuity products and options available, and different ways they can be used as part of a wider mix of retirement income solutions.”
Hereward Mills is a freelance interning with FT Adviser
