Speaking on a panel at the Later Life Lending Summit about women’s financial resilience in retirement, Caroline Barr, chair of the British Insurance Brokers’ Association, said that a significant number of single, female homeowners were already experiencing, or on track to experience, financial difficulty in retirement.
Women’s median pension is around half that of men’s, Barr said, adding that she was worried by the lack of policy in place to address this.
Barr said the data suggested that women’s lot was to “grow old and get poor”, but the industry could act to prevent this from happening.
Eve McGrady, head of consumer duty at Fairer Finance, expanded on this, warning that society was “on the verge of a later life crisis” as the number of people retiring without sufficient savings increased each year.
Data shows that 57% of pensioners living in poverty were women, which McGrady said was compounded by the fact that they lived longer than men and were more likely to be single in retirement, either through divorce or bereavement.
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Considering all options
While nearly two-thirds of single female homeowners have, or are on track to have, insufficient income in retirement, many do have housing wealth, McGrady said.
She said encouraging people to consider later life lending options would benefit both men and women, as many people were aware of equity release but had not acted, but holistic advice would be beneficial.
Barr said people needed to take a balance sheet approach to their finances and consider assets as a whole.
McGrady said there were demographic influences that impacted a woman’s pension savings in retirement, such as taking time out to raise a family, and firms could use this to start engaging with women earlier.
McGrady added that there may be too much of a focus on pensions, which made people think of this in silos.
Cecelia Furner, distribution director of retail finance at Legal & General (L&G), said it was important to consider how and why women arrived at retirement with smaller savings than men.
“It’s often linked to engagement [with advice], confidence and sometimes, it’s structural. There are so many things that happen throughout [women’s] lives,” Furner added, saying that her own mother, who went through a divorce in her 50s, wished someone had spoken to her about financial planning.
Barr said the “double whammy” was that many of these life events left women feeling vulnerable and potentially reluctant to seek financial advice.
Helping clients see the bigger picture
Furner said the sector could “make professional connections” across the advice space, such as with wealth planners and solicitors, to reach women and provide guidance.
Rachael Hunnisett, director of mortgage distribution at April Mortgages, said that customers did not think of their financial circumstances in silos, but said when they approached an adviser with a goal to buy a house, they were given limited or a single option.
“We as an industry force them into a silo,” Hunnisett said, adding that professionals needed to think about supporting clients over their lives.
She said the sector had a responsibility to innovate and said that although flexible later life products could cost more to fund, there was value in offering them.
Hunnisett said there was a “real gap between later life advice and mainstream advice” and while this was getting better, advisers who typically dealt with first-time buyers, for example, have enough understanding around when to “hand that client over”.
She said the sector needed to think of ways to break down barriers and incorporate the challenges older people face into product design.
Furner agreed, saying clients should be made aware of their future options as soon as possible.
“If we never talk about annuities and guaranteed income, then we suddenly get to 75 and then get that advice, it’s going to feel strange… we need to normalise having that conversation much earlier on,” Furner added, saying it would feel more natural to customers that way.
Hunnisett agreed, saying the taboo around speaking about money also needed to be removed.
Barr asked what could be done to show the industry was trying to prevent single women from facing financial difficulties in retirement, and Furner said it was a “structural problem, and there are a number of reasons we are where we are”, but said one way to address this was to make it easier for women to engage with advice and support services regularly.
“Mortgage advisers often have meaningful conversations with clients… where they open up about absolutely everything, but I think too often, those conversations are completely separate from what they have for retirement advice.
“We need to tie that all together… when we say holistic, it needs to mean in the mortgage market as well as across pensions and property wealth,” Furner said.
McGrady said incorporating housing wealth into pension dashboards could improve outcomes for women, too.
