With the majority of men taking out ‘single life annuity’ many women without their own pension pot will be left with nothing should their partner die.
Close to one in two women over 40 who are married do not have a personal pension and wrongly presume they will be financially secure.
Many women let-go careers in order to raise their young children, leaving their husband to become the sole breadwinner – leaving him with the job of organising a pension.
This leaves women who’s marriage ends in divorce, or are widowed with no income, as their partners pension is only paid when he’s alive.
When cashing in a pension pot, most people opt for an annuity, which pays a regular income for life.
But the most men take out a ‘single life annuity’, which means that the money is paid only while they are alive.
When they die, the annuity is halted, in spite of of any surviving spouse.
So women, who usually live longer than men, will be left with no income other than the state pension and see their quality of life collapse.
Dr Ros Altmann, director general of Saga, the old age specialist, said: ‘The annuity situation is one of the biggest scandals in our pensions industry.
‘Many men do not do it on purpose. They do not understand pensions, and their wives do not get involved in the decision about which annuity to buy.’
But ‘joint life’ annuity can pay up to 100 per cent of the annuity to the surviving partner.
Laith Khalaf, pension investment manager at financial advisers Hargreaves Lansdown, said: ‘It is a worry for women, who may live for many more years without the crucial annuity income.’
Vince Smith-Hughes, head of business development at insurance giant Prudential, which commissioned the report, said: ‘Women who think they can rely on their other half’s pension income without having discussed retirement plans with their partner, and preferably a financial adviser too, could find themselves in financial trouble if they outlive their loved ones.’
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