Who gets the biggest pension – men or women?

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Do the same figures apply if Herman, John and Paul were female?

Last week Carol left a comment on the blog asking this question. Carol was talking about the size of their pension incomes. It’s actually an excellent question which I’m now going to answer. But first…

Who on earth are Herman, John, and Paul anyway?

Over the last few weeks we wrote an article – actually two articles – on what income a large sum of money from your pension fund would buy you. The first article was “What income will a million Rand pension buy you?” and the second one was “What would a 5 million Rand pension buy you?”

Now if you read those two articles you would know of Herman, John, and Paul.

  • Herman was the poorest of the three since he only had the same money as John and Paul available to retire once he turned 65.
  • John had the money available at 60, while
  • Paul was a go-getter type and had the same money available at 55

Their pension incomes worked like this:

  • Herman ended up being paid R3, 601 a month on the million
  • John gets paid R2, 787 a month, and
  • Paul walks away with R2, 373 a month.

Now back to what Carol was asking.

Do the same figures apply if they were female? Truth be told – no, they don’t. But let’s first look at what pension Carol would get at the same age. “Pension” is actually the wrong word to use. The correct word is “annuity” or “annuity income” but most of us are familiar with the term “pension”.

Carol at 65:

Click on the image below to enlarge:

Carol at 65 with a R1 million pension

 

Carol gets R3, 088 a month compared to Herman who gets R3, 601 a month at the same age

What about Carol at 60?

Click on the image below to enlarge:

Carol at 60 with a R1 million pension

At 60 Carol gets R2, 504 a month compared to John on R2, 787 a month.

And at 55?

Click on the image below to enlarge:

Carol at 55 with R1 million pension

Carol clears a cool R2, 066 a month versus Paul on R2, 373 a month.

So why do men get more money than women?

It’ s all about longevity!
Women live longer than men. So if each of them approach a life insurer with exactly a million Rand in their pocket, the man will get the higher monthly income because they expect him to die sooner. I can see the smiles dropping off the gents faces as we speak.

So Carol, I hope that answers your question?

And by the way I haven’t even told you half the story. There are things like:

  • guarantee periods,
  • joint life annuities, and
  • living annuities

which I still need to share with you, and which influence your income. So don’t go away because we still have lots to tell you.

What do you think of how the system works? Leave a comment below.

If you need assistance with your investment planning, drop us line.

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Until next time.

The InsuranceFundi Team

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