The retirement income gender gap is £6,700 a year, according to new research from Prudential. Women’s expected annual retirement incomes are 35 per cent lower than men’s, at £12,200 compared with £18,900.
Prudential’s ‘Class of 2014’ research is its seventh annual study tracking the future financial plans and aspirations of people planning to retire in the next year.
Despite the widening gap in expected retirement incomes, there is some comfort for this year’s female retirees – at £12,200 their average expected annual income is £450 higher than it was in last year’s study. However, a man’s average expected annual retirement income has grown by £650 since last year to £18,900.
Prudential’s research first highlighted the issue of a retirement income gender gap in 2009 when women’s average expected retirement incomes of £13,700 a year were £6,600 less than male retirees. The gap peaked in 2010 when men’s expected retirement incomes were larger by £7,400. This year’s gender gap shows a rise of £200 since last year and is now at its widest since the 2010 peak.
As the ‘Class of 2014’ research reported earlier this year, across both sexes retirees expect an average annual retirement income of £15,800 including income from private, company and State pensions. This is £500 higher than in 2013 and the first rise in three years.
Vince Smith-Hughes, retirement income expert at Prudential, said: “It is welcome news that average expected retirement incomes have increased for both men and women, but concerning that the gender gap remains stubbornly wide.
“The changes to pensions and how people can take their retirement income announced in the Budget last month will provide savers and retirees with more choices. However they don’t alter the fundamental fact that many people are not saving enough for a comfortable retirement. There are also some specific practical steps that women can take today to improve their retirement incomes in the future. These include maintaining pension contributions where possible during career breaks and making voluntary additional National Insurance contributions when returning to work.
“A consultation with a financial adviser or retirement specialist could help women put together an action plan to help increase their potential retirement income. The Pensions Advisory Service (TPAS) also provides information about the options available to women in the run up to retirement.”
Michelle Cracknell, Chief Executive of The Pensions Advisory Service, said: “Women generally have lower pensions than men and there are many obstacles that prevent women from building up enough pension savings, such as lower lifetime pay, and career breaks due to caring responsibilities and bringing up children.
“At TPAS we have an ongoing initiative to help women with their preparation for retirement and this research shows how important the information that we provide is to women planning their retirement."
Prudential’s study also found that only 41 per cent of women planning to retire this year feel financially well-prepared for retirement, compared with 54 per cent of men. Just 29 per cent of women believe they will have enough income to enjoy a comfortable retirement, compared with 47 per cent of men.
In the North West of England the retirement income gender gap is narrower and women’s expected incomes are higher than anywhere else in the UK – women expect to retire on £13,850 a year, just £1,500 less than the figure for men (£15,350).
The gap is widest in London where the average expected retirement income for women of £10,500 a year – the second lowest in the country – is only 43 per cent of that expected by men (£24,500). Women’s expected retirement income is lowest overall in the South West, at £9,650 a year.
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