• Women face longer working lives than men, the opposite to five years ago
• Affordable retirement delayed until people are in their 70s
Women are having to work a year longer than men to meet their retirement goals according to the AXA Wealth Pension Index, which has tracked affordability and volatility in retirement saving since early 2011*.
The index highlights when men and women can afford to retire with an annuity equal to the average industrial wage. In 2007, women reached this annuity level five months before men, but as a result of falling annuity rates, women today need to work seven months longer than men. In total women will spend one extra year in the workplace than this time five years ago, reflecting the significant impact of market volatility on pension and retirement planning.
The impending EU Gender Directive, due to come into force 21 December 2012, will further challenge women’s pension planning as gender-based bias when setting annuities is outlawed, further eroding the level of income available.
Simon Smallcombe, head of guaranteed distribution for AXA in the UK, commented: “The growing gender gap is particularly interesting to note in the context of the EU Gender Directive. While the Directive will see insurers prohibited from using gender-based factors to determine and set annuities and other premiums, this will cause consternation and likely further delay women’s retirement. While there will be a decrease for women, men will likely experience a heavier fall in annuity rates.”
Alongside the Pension Index, AXA Wealth conducted consumer research** looking at the UK’s desires and expectations in relation to retirement age. The results show expectation differs greatly from reality:
• average age people would like to retire is 57
• average age people expect to be able to afford to retire is 65
• average age people will actually be able to afford to retire is 70.
Smallcombe concluded: “The AXA Wealth Pension Index has confirmed that the 70s are the new 60s when it comes to affordable retirement. The expectation gap evidenced by the consumer research is worrying and highlights why early preparation is more important than ever. All options in retirement planning should be considered to guarantee future income in the face of volatile markets.”
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