A new report on the UK’s readiness for retirement by pensions and savings provider Aegon finds that women expect half the income of men in retirement, expecting just £24,000 against men’s £47,000.
Women are also significantly less engaged with their pension, with 46% having never checked the performance of their savings, compared to 36% for men, who are also much more likely to check their pot more regularly.
The investigation into the UK’s readiness for retirement comes in the wake of the recent launch of Retiready, a digital service designed to help people consider their retirement ambitions and understand if their overall readiness for retirement is on track. Available to use on mobile, the service demonstrates how adjustments to pension contributions, planning and money management can make a big difference.
A key part of Retiready is its readiness score, which provides a mark out of 100, giving people an indication of their readiness for retirement. Ahead of the launch of Retiready, Aegon tested 2,000 men and 2,000 women, asking a host of questions about their behaviour, awareness and finances to assess their readiness score.
Across the UK men achieved an average score of 54, markedly higher than the 50 received by women, and twice as many men are on track to reach their goals as women (10% vs. 5%). However this means at least nine in 10 are set to fall significantly short of their retirement ambitions, failing to score 70 across the three criteria behaviour, awareness and finances.
The shortfall in financial preparations in women could be explained by a lower average salary, leading to average pension contributions of £175 each month, nearly half the £328 put away by men, but the report also finds that women’s awareness of how to how to improve their financial position is also wanting. Only 3% received an awareness score that suggests they know how to plug this shortfall, compared to 5% for men.
The research found that women are contributing more to ISAs than men, £183 against only £127.
Developed with customers, Aegon’s new Retiready digital service allows UK consumers to determine their readiness for retirement with a unique score out of 100. This gives consumers an indication of how on track they are in meeting their retirement goals. If they’re not on track, Retiready provides tools and digital coaching to help them make informed choices to improve their score and take control of their financial future.
In addition to keeping track of retirement readiness, the service provides access to a Retiready Pension, offering one of four investment funds, or a Retiready ISA for those who want 24/7 digital access to information about their pension and retirement savings.
David Macmillan, managing director of Aegon UK, said: “We know that most of the UK population is falling short of their retirement objectives, and the gap between men and women must be closed. Especially concerning is that only three per cent showed an awareness of how to improve their financial position, and many aren’t reviewing savings enough to be aware of the shortfall they may face. It’s time for the pensions industry to lead the way in helping them find solutions and showing them that small steps can make a big difference.
“Aegon is committed to getting the UK ready for retirement and we’re therefore delighted to announce the arrival of Retiready, which will not only help show people how their retirement pot stacks up against their ambitions, but also provide valuable coaching and support to help get them back on track.
“For the first time we can help people understand where they are on their journey to retirement with a quantifiable readiness score. Retiready is an invaluable digital service for all those preparing themselves for later life and represents a huge leap forward for Aegon and the industry as a whole.”