Some female retirees in the UK could face a staggering 14-year shortfall between exhausting their private pension savings and the end of their lives, new research by Legal & General (L&G) has revealed. The findings suggest that, based on current withdrawal rates, women may run out of private pension funds by the age of 73, a full decade earlier than men.
A risky pension gap
The study, released ahead of International Women’s Day (Saturday, 8 March), highlights a significant disparity in pension security between men and women. According to L&G’s modelling, the average life expectancy for a 60-year-old woman in the UK is 87 years, meaning some could face a 14-year gap without private pension savings.
By contrast, men’s pensions are predicted to last until the age of 83. Given that a 60-year-old man’s average life expectancy is 85, this would leave them with only a two-year shortfall compared to the much longer period faced by women.
Katharine Photiou, managing director of workplace savings at L&G, warned that pension withdrawals could create a “lottery effect,” adding:
“What seems like financial freedom now might turn into uncertainty later.”
The analysis was based on life expectancy data from the Office for National Statistics (ONS) and an Opinium survey of 3,000 people over 50, conducted in December 2024. It considered various economic factors, including inflation and investment returns, and assumed individuals began making regular withdrawals at 67, continuing until their pension funds were depleted.
Why are women at greater risk?
The research pointed to multiple factors contributing to the gender pension gap. Women typically withdraw less from their pensions than men but start with significantly lower savings. The average private pension pot for women stands at £40,000, compared with £87,500 for men.
Despite withdrawing less overall, women are receiving an average of £625 per month from an income drawdown pension, while men receive £875. Alarmingly, more women than men have had to increase their withdrawal rate since they first started accessing their pension.
“More than a quarter (27%) of women making withdrawals had increased their withdrawal rate, compared with less than a fifth (19%) of men,” the report stated.
Financial challenges such as lower earnings, part-time work, and caring responsibilities further impact women’s ability to save adequately for retirement.
Catherine Foot, director of Phoenix Insights, emphasised:
“While pay is a major reason behind the gender pensions gap, the disparity is made worse by life events that women can face – such as motherhood, divorce, caring responsibilities, and menopause – which disproportionately affect their ability to save.”
Women investing more for financial security
The L&G report coincided with a survey by savings and investment app Moneybox, which found that nearly one in 10 (9%) women plan to start investing this year, while 13% intend to increase their investments.
For women aged 25 to 34, investing was identified as the top financial goal. The survey, conducted by OnePoll, found that:
- 59% of women who invested last year did so to grow wealth.
- 47% aimed to secure a comfortable retirement.
- 34% sought to provide for their families in the future.
- 18% viewed investing as a hobby.
London and Northern Ireland had the highest rates of first-time female investors last year, indicating a growing awareness among women of the need to take control of their financial future.
Challenges in saving for retirement
A separate study by money platform Intuit Credit Karma found that more than half (59%) of parents had taken on debt to afford maternity or shared parental leave, borrowing an average of £2,658.
Worryingly, a quarter (25%) of these parents were still repaying this debt by the time their child started school. Women were also less likely than men to move to jobs with enhanced parental benefits.
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- 21% of men taking shared parental leave had switched jobs to employers offering better benefits.
- Just 9% of women taking maternity leave had done the same.
Akansha Nath, general manager (international) at Intuit Credit Karma, stressed the importance of careful financial planning:
“Setting aside savings where possible and carefully budgeting for your reduced income and unexpected expenses can help alleviate financial strain.”
Addressing the gender pension gap
Experts are calling for systemic changes to address the gender pension gap and provide women with better financial security in later life. Ms Foot urged employers to take more responsibility:
“Addressing the gender pension gap means thinking about how women are supported at every stage of their working lives and encouraging employers to go above and beyond the minimum levels of support.”
She suggested that companies introduce greater workplace flexibility around caring commitments and improve access to pension savings, as many women do not meet the minimum earnings threshold for automatic enrolment in workplace pension schemes.
With women at greater risk of financial insecurity in retirement, urgent action is needed to ensure they are supported in building sustainable long-term savings. Without intervention, millions could face a bleak future, struggling to make ends meet long before their retirement years are over.
