However, fraud poses a risk as both men and women receive cold calls
• 7% of women are now ready for retirement, a 2% increase since April 2015 – narrowing the gap between men and women
• 18% of men, and 15% of women have decided to save more into their pension as a direct result of the pension freedoms
• Women have become more realistic about retirement age and income expectation since April 2015
• Men are more at risk of being targeted by pension fraudsters
In April 2015, the Government introduced new pension rules which have given people with defined contribution pensions new opportunities to access their pension savings and use this money in the way they choose from age 55. These pension freedoms have caused an immediate uplift to the contribution levels of both sexes, with nearly one in five (18%) men and a sixth (15%) of women paying more into their pension savings as a direct result of the reforms.
Aegon’s fourth UK Readiness Report, the latest in a series of reports that looks at attitudes toward retirement, finds that the pension freedoms introduced in April are having a positive influence on women’s financial behaviour.
Women have become more realistic about their retirement age since April 2015, now aiming to retire a year later, at 64. Women’s retirement income expectation of £40,700 is lower than that of men’s £45,800, however both these sums would require a savings pot of more than £1m, higher than the new pension lifetime allowance[ii].
While both sexes remain unrealistic, the gap between women’s desired and likely retirement income from April 2015 has narrowed by £3,400 over the past six months. This is compared to just a £50 reduction for men.
Dangers of fraud
While pension freedoms have brought about improvements to men and women’s pension contributions, fears that the reforms have also opened the door for fraudsters are being vindicated for both sexes, but in particular for men.
23% of men, and 16% of women in the UK have received a cold call offering a free pension review or pension investment opportunity and 18% of men and 12% of women have received an offer suggesting they can access their pension pot before 55. In addition, 13% of men, and 9% of women have received a text message offering a free pension review or pension investment opportunity.
These are worryingly high numbers, especially as a third (32%) of women and one in five men (17%) are not aware that the reforms increase the likelihood of pension scams.
Kate Smith, Regulatory Strategy Manager at Aegon said: “Women are making the biggest steps way when it comes to getting on track for the retirement they aspire to. Since April 2015 there has been a shift as women in the UK have become more realistic about their retirement income expectations, increased their expected retirement age, and started to close the gap to their male counterparts.
“But there is a long way to go, and this improvement is set against a backdrop of unique challenges for women. The gender pay-gap currently stands at 19.7%[iii] which places women immediately on the back foot. Women often face more disrupted working lives, cutting their hours for childcare or simply taking time off to start a family, which leads not only to an immediate drop in pay, but also the possibility of a longer term effect on future income and, consequently, on savings.
“In addition to these considerations, women have recently seen a rapid rise in state pension age, leaving many unable to access their state pension until age 65, and in some cases age 66. These changes remain a point of discussion in the government, as the Women Against State Pension Inequality (WASPI) campaign group continue to push for support for women hit by these changes.
“Industry reforms such as auto-enrolment and pension freedoms are working, and they are already having a positive effect on the saving behaviour of women in particular, with more of them ready for the retirement they want than ever before. But the challenges women face when planning their retirement remain complex, and it is vital that we continue to support those starting out or still on their savings journey.”
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