New research reveals pension freedoms gender divide

Tom Selby
7 March 2019

Ahead of International Women’s Day tomorrow, AJ Bell commissioned research* to examine the varying pension freedoms experiences of the different sexes.

Headline findings

•        Women who have entered income drawdown since the pension freedoms launched in April 2015 have retirement pots worth £118,000 on average – 34% less than the average man (£179,000)
•        As a result, average annual withdrawals for women are significantly lower (£6,710) than men (£8,002)
•        Women tend to be less confident in their knowledge of the pension freedoms reforms, with 5% describing their understanding as “very good” versus 18% of men
•        The differing income levels naturally translate into a divide over retirement expectations, with 62% of female respondents concerned about running out of money in retirement compared to 53% of men
•        This is perhaps driven in part by a difference in expected investment returns, with women anticipating 3.82% per year versus 4.37% for men 

Tom Selby, senior analyst at AJ Bell, comments: 

“A yawning chasm exists between the pensions of women and men. This can partly be explained by differences in salary levels, hours worked and the fact women are more likely to take breaks from work to care for children.

“While efforts are now being made to close this earnings gap, women in full-time jobs still earn on average 8.6% less than men. The gap among all employees is much higher at 17.9%, driven by more women working in part-time jobs which tend to be lower paid. 

“Given women, on average, tend to earn less than men it is unsurprising this translates into a retirement income gap. 

“While there are policy reforms that could help boost women’s pensions – such as addressing the net pay anomaly which means many lower paid workers miss out on pension tax relief altogether – the central problem is the pay gap. If this can be eradicated, you would expect the retirement income gap to close dramatically.”

Not so great expectations

“Women using the pension freedoms tend to be less confident in their knowledge of the reforms than men. There is no obvious reason why this should be the case, and could even reflect a greater honesty among women in the face of some fairly unpleasant complexity. 

“I would certainly be surprised if 1 in 5 men could hand-on-heart say they understand the workings of the Money Purchase Annual Allowance and pension death benefits.

”There is also a sizeable difference in fears and expectations in retirement between the sexes. While only 53% of men are worried about running out of money too soon, this jumps to 62% of women.

“Among other things, this may be because women are less confident in the ability of the stock market than men. On average women expect investment returns of 3.82% compared to 4.37% for men. 

“This difference could be explained by different risk tolerances, with various studies finding women tend to be more cautious than men when it comes to investing. Of course nobody knows what returns markets will deliver, and the experience of 2018 hammers home the point that portfolios invested in risky assets can go down as well as up.” 


* The research was conducted by Censuswide between 08.02.2019 - 14.02.2019, with 554 respondents (aged 55+) that have entered pension income drawdown since April 2015. Censuswide abide by and employ members of the Market Research Society which is based on the ESOMAR principles.  

Tom Selby
Senior Analyst

Tom Selby is a multi-award-winning former financial journalist, specialising in pensions and retirement issues. He spent almost six years at a leading adviser trade magazine, initially as Pensions Reporter before becoming Head of News in 2014. Tom joined AJ Bell as Senior Analyst in April 2016. He has a degree in Economics from Newcastle University.

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