The most recent research by Prudential has shown that the expected retirement income of women is 35 per cent lower than that of men. Women who are planning to retire this year can expect an annual income of £12,200 on average, compared with £18,900 for men.
The £6,700 difference can be accounted for in a few ways, not least because it’s a commonly accepted fact that women are paid less than men, and also because women who have children largely have to check out of workplace savings for at least a year. Both of these have a knock-on effect on the amount they are able to save for retirement. Here is where the compulsory one-to-one retirement guidance proposed in the Budget could have an enormous impact.
Relatively safe in the knowledge that nothing will be done in the near future to take the gender imbalance around pay and parental leave more seriously, the next best thing we can do is cure, rather than prevent. If, as some have suggested, the new mandatory ‘guidance’ around retirement options comes in earlier in life, rather than at the point of retirement, then this is exactly the moment at which we can start addressing gendered issues such as this.
Instead of letting women get to the point of retirement with an undernourished pension pot – for whatever reason – free, impartial, face-to-face advice could be a chance to impress upon women statistics such as these, and make sure they are equipped with ways to compensate for any financial imbalances that occur over a woman’s life.
Some have commented that putting this free guidance at the point of retirement is as good as useless, and if it is to have any effect at all it must come much earlier. Actively thinking about retirement earlier rather than later is, universally, a good idea, but if it can address specific and tangible inequalities and as-yet unsolved problems, then it is all but essential.