Proposals have emerged from the EU to abolish different annuity rates for men and women. This would mean that both men and women of the same age would receive the same amount of income, for the same level of investment, be it through pensions or investments.
Currently, as women tend to live longer than men do, they tend to be offered lower annuity rates and therefore lower income. The Association of British Insurers has criticised the EU plans, saying that introducing one flat rate for men and women would increase costs for investors. They did suggest that encouraging the almost 50% of women that do not save towards retirement to do so would eliminate the need for a single annuity rate.
Our View
Historically, men have been the breadwinners and have therefore been the ones saving into pensions. Recently, more and more women are entering the workplace and many are now the main breadwinners. However, although some women do save towards their retirement, almost 50% apparently do not.
Women tend to live longer than men do and, as mentioned above, receive lower annuity rates to convert their pension fund into income. This means that if a man and woman of the same age had the same amount of money to buy a pension with, the woman would receive a lower amount.
If women actually saved more towards their retirement, leading to a larger pension fund, they should receive at least an equivalent income to men.