Another trend is evident: not as many women as men keep their Sipps into drawdown. Nearly 50 per cent more men crystallise into drawdown than women who, despite living longer, are getting out of their Sipps before their male counterparts.
The appetite for investment risk can clearly differ from what is considered palatable for income – and then there are other risks, too.
Risk of the regulator reducing risk
There is no gender bias in the recent actions from the regulator, from its findings into the thematic review of Sipp operators to the more recent consultation paper, CP 12/29, that builds on CP 12/05. But neither men nor women can ignore that both papers show the FSA has serious concerns about some Sipp providers. In particular, it highlighted that they:
• Have senior management with a poor understanding of regulatory requirements and individual responsibilities;
• Have poor governance and lack oversight of the conduct of their firms;
• Have inadequate risk identification processes, poor management information and risk mitigation planning;
• Hold insufficient capital to absorb unexpected liabilities;
• Undertake inadequate due diligence of introducers and investments;
• Overlook conflicts of interest; some Sipp operators are acting as the administrator, adviser and investment provider or providing another pension such as a small self-administered scheme, without sufficient controls to manage these conflicts.
It would take many more pages to unpick the likely requirements behind the findings. For now, it is safe to assume the Sipp industry needs to pull its collective socks up from a variety of different heights. The fear that parts of the industry risk causing significant detriment to consumers drives the regulator’s thinking, and this fear could easily manifest itself in making consumers more cautious.
But are these factors, highlighted by the FSA, putting off female investors from saving in Sipps? Human behaviour is a fascinating thing. Generally, we are prepared to take a greater degree of risk when we are earning money and saving it than when we are no longer earning and relying on our savings for an income. There is more uncertainty: will the savings last long enough? What if costs and inflation go up too quickly? What if you live ‘too long’? This applies to both men and women, although the way individuals respond to these questions differs.
