Women in drawdown face a 37% shortfall in their annual retirement income compared to men, leaving them more than £47,000 worse off, according to new research from Zurich UK.

On the third anniversary of the introduction of Pension Freedoms, Zurich UK launched new data entitled Drawdown: Is it working for consumers?.

The firm says the report is the largest of its kind on the impact of drawdown on financial and emotional wellbeing.

The study revealed the “emergency of a new gender drawdown gap”, which potentially puts women at risk of running out of cash.
 
It found men in drawdown have an average pension pot of £212,000, which at a 3% yield secures an annual income of £6,360.

Women have an average pension pot of £132,000, equating to an income of just £3,990.

This means women have £2,370 less per year and would need to find riskier investments, yielding 5%, to match the retirement income of their male counterparts. 

Longer life expectancy also meant they would need to stretch out their pot over a longer period. 

A woman retiring at 65, can expect to receive £47,400 less income over a typical 20 year retirement.

The study was based on a YouGov survey of a UK sample of 742 people who have moved into drawdown since the pension freedoms were introduced in April 2015, it was carried out in December and January. 

Rose St Louis, of Zurich UK, said: “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.”