Pensions  

Covid-19 is disrupting pensions

Covid-19 is disrupting pensions

Covid-19 has set pensions equality back by decades, an expert has warned.

Professor Debora Price said any previous improvements to bridge the gender gap in pension provision have now been ruined as a result of the coronavirus pandemic.

On September 10, speaking at FTAdviser’s webinar The Long and Short of Longevity Risk, the professor of social gerontology at the University of Manchester said: “Everybody knows that women live longer than men, so there is this longevity effect.

“Women accumulate much less pension than men over their lives – so for any given age it’s about 20 per cent of men’s pension.

“We know that women earn less, they have different kinds of jobs, they have career breaks, they take on care, they have very disturbed earnings over their lives, and one of the main effects of Covid-19 that we are witnessing globally, but also very strongly in the UK, is that women’s lives are going to be much more disrupted.

“They are at much higher risk of redundancy, and any improvements that we were making towards pension equality for women is being set back possibly decades and we don’t know if there will be a recovery.”

The webinar, sponsored by Legal & General, will be available online for a month. Panellists also discussed the impact of talking to clients about life expectancy, and how advisers can derisk their business while protecting their clients from longevity risk.

During the discussions, Professor Price raised concerns surrounding the conflicts advisers face when financial planning for a couple, as women tend to outlive men, but men often hold the purse strings in a relationship.

She said: “Research suggests women are conditioned to have less inclination to be involved in finance and I think that’s a very challenging thing for financial advisers.

“The thing I am most interested in is how couples manage their finances together”.

“The research suggests that at all ages in the vast majority of couples these are things that are still male dominated. So when a financial adviser speaks to a couple, the underlying thing here is that these women are at very high risk of poverty in the event of divorce and widowhood. So when you’re sitting in front of a couple, who are you advising?”

The panel discussed anecdotal evidence suggesting a deep conflict of interest between what the woman, who might live to 100, 102 or 105, might need from the finances and what the man might want or need, which they agreed was very challenging.

Professor Price added: “I think that’s made much more challenging by pensions freedoms and Covid-19, which is already being referred to as ‘the widow maker’.”

Covid-19 impact

Joseph Lu, director of longevity science at Legal & General Retail Retirement Income, also said longevity planning has been negatively affected this year due to Covid deaths. He also suffered from Covid-19 in March and spent 10 days in bed recovering, which forced him to make a will.