NEW PENSION rules that come into effect in April 2015 are being viewed with more enthusiasm by men than by women, a new study has found.
Research from the Association of Investment Companies (AIC) into attitudes among those earning £50,000 or more towards the forthcoming pension changes revealed that some 54 per cent of men, versus 46 per cent of women, said they were currently making voluntary contributions into a pension scheme.
Over a quarter (26 per cent) of the over-40s sample were more inclined to increase their pension contributions after April 2015. However, men were the most likely to increase the amount they pay into their pension (28 per cent, compared with 20 per cent of women).
And while the changes made 44 per cent of adults feel more positive about pension schemes, there was a 12 percentage point difference between the genders (47 per cent male, 35 per cent female).
The AIC published the research as part of its Freedom in Pensions series, which looks at how investment companies can be used to build a long-term pension portfolio.
Ian Sayers, director general of the AIC, said: “It’s well known that many of us are not contributing enough to our pensions. So it is hugely encouraging to see that with new pensions freedom only months away, consumers are already much more enthusiastic about pensions.
“However, it appears that women are generally more cautious about the new freedoms than men. When we looked at the research along gender lines the differences were quite noticeable, and we hadn’t expected that.”
Mr Sayers said that there were several things that people – especially men – liked about the rule changes.
“Men tend to like the ability to hand on assets after death. There’s no doubt about that – it came out very strongly in our research. They like to think they may be able to help with university tuition fees or house deposits – even if they’re no longer around,” he said.
“Also, a lot of people worry about inflation. Around 70 to 80 per cent of people with a flat annuity worry about that, but a lot of people on an escalating annuity worry about it too. The new rules make it much more possible to grow income above the rate of inflation, and that’s very popular.
“In the end, of course, people just don’t like being forced into making decisions, and the changes mean they have now got that choice.”
Pinpointing exactly why men are more enthusiastic about the rule changes than women may be more difficult, but Mr Sayers said that it appeared to be attributable, at least in part, to a greater appetite among men for risk.
“Men tend to be a bit bolder in financial matters, and prone to take more risks. They tend to be keener on having the new freedoms that the rule changes give, and accept that they come with increased risk,” he said.
He also pointed to a practical reason for the difference: pot size.
“As a rule, men tend to have larger pension pots than women, and for some things you need a larger amount of money. For income drawdown, for example, some people say you need a pension pot of around £200,000,” he said.
“If you have a smaller pot you might tend to be more cautious and less inclined to expose that pot to risk. The security of the capital value might be more important and in that case you might want to think about an annuity.”
Chancellor George Osborne surprised the pensions industry with a dramatic overhaul of rules at this year’s Budget, promising that no-one would be forced to buy an annuity in future.
The changes are to be complemented by free guidance for those reaching retirement.