29th April 2014
New research has found that women’s expected annual retirement incomes are now 35% or £6,700 a year lower than men’s writes Philip Scott.
Insurer Prudential in its ‘Class of 2014’ retirement analysis, which tracks the future financial plans of people planning to retire in the next year, concluded that on average men can expect to retire on an income of £18,900 compared to just £12,200 for women.
Despite the significant gender gap, female retirees’ expected annual income is £450 higher than it was in last year’s study. However the gap is still growing and has hit its highest peak since 2010, when expected retirement incomes for men were £7,400 larger.
Prudential’s research first highlighted the issue of a retirement income gender gap in 2009 when a women’s average expected retirement income was £13,700 a year, £6,600 less than male retirees.
But despite the present forecasts retirees across both sexes are in a more optimistic mood, as they expect an average annual retirement income of £15,800, including income from private, company and state pensions – £500 higher than last year and the first rise in three years.
Gender gap table 2009-2014 (expected incomes rounded to nearest £50)
|Planned retirement year||Expected annual retirement income||Gender gap|
Vince Smith-Hughes, retirement income expert at Prudential, says: “It is welcome news that average expected retirement incomes have increased for both men and women, but 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.
Michelle Cracknell, chief executive of The Pensions Advisory Service, adds: “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% of women planning to retire this year feel financially well-prepared for retirement, compared with 54% of men. In addition just 29% of women believe they will have enough income to enjoy a comfortable retirement, compared with 47% 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, at £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% of that expected by men, at £24,500. Women’s expected retirement income is lowest overall in the South West, at £9,650 a year.