According to the provider's analysis, based on life expectancy figures from the Office for National Statistics, women in England are able to draw a pension income of £6,490 from a £100,000 pot, which is almost £1,000 less than men in Scotland, who might be able to take up to £7,445 a year.
Region | Gender | Average life expectancy at age 65 | Maximum income for £100,000 retirement fund |
England | Male | 83 years 10 months | £7,035 |
Female | 86 years 1 month | £6,490 | |
Wales | Male | 83 years 2 months | £7,220 |
Female | 85 years 7 months | £6,600 | |
Scotland | Male | 82 years 5 months | £7,445 |
Female | 84 years 8 months | £6,820 | |
Northern Ireland | Male | 83 years 4 months | £7,170 |
Female | 85 years 7 months | £6,600 |
Since the introduction of pension freedoms in 2015, retirees have been attracted to the flexibility of income drawdown, despite the risk it creates of running out of money part way through retirement, Aegon stated.
According to recent research from the Pensions Policy Institute (PPI), drawdown products have become more popular, accounting for 30 per cent of retirement product purchases.
Aegon's analysis calculates how much an individual could take out each year to run out of money to coincide with average life expectancy, assuming investments grow by 3.25 per cent each year after charges.
The variation is even greater if differences in life expectancy within regions and cities are taken into account.
The group with longest life expectancy is females living in Camden, who on average live to age 89 years and five months, meaning they have to spread their retirement funds over an extra nine years and three months compared to a male in Glasgow.
According to Steven Cameron, pensions director at Aegon, while drawdown offers greater flexibility to savers, it means people need to predict how long their retirement is likely to last, so they avoid the risk of taking too much income and running their pension pot dry.
He said: "Gender and where people live can have a huge impact on average life expectancy. Women aged 65 in England can expect to live four years and one month longer than men in Scotland and need to spread their pension pot over these extra years.
"Of course, no-one knows exactly how long they will live and it is extremely risky to base your income on living no longer that the average, as many people live far longer. The affordable income also depends on an individual's overall health and where the pension fund remains invested.
"Whether you are a man in Glasgow or a woman in Camden, we always recommend seeking advice to arrive at a sustainable income level and an investment strategy that allows freedom in retirement while controlling the risk of running out of money."
According to Charles Chami, director of Glamis IFA, the conclusions from Aegon make sense when dealing with aggregated data.
He said: "Given the same amount of money, a hypothetical person with a shorter life expectancy could drawdown more money per year than someone with a longer life expectancy.
"However when advising real people, we cannot operate with that kind of certainty on life expectancy, so our advice is likely to be more cautious.
"We may, for example start by giving a client a yearly withdrawal figure that we believe is sustainable ad infinitum. If this is not sufficient to meet their income needs we can offer projections on when a given pot of money might run out, assuming a higher withdrawal rate.
"The ultimate withdrawal amount will be decided by the client with advice and guidance from us.
"In addition, clients do not have to specify a flat amount of income every year for the rest of their lives.
"If the withdrawal looks to be too high then it can potentially be reduced in future years.
"Likewise if investment returns are good and life circumstances change, they may be able to increase their withdrawal rate.
"Either way we would always encourage people to review their income, investments and withdrawal rate at least annually and make adjustments where necessary."
maria.espadinha@ft.com
