Pensions  

Pension gender gap £200 a year worse

Pension gender gap £200 a year worse

Women expecting to retire this year will be £6,400 a year worse off on average than their male counterparts, and nearly £200 a year worse off than women who retired in 2016.

Women this year expect an average annual retirement income of £14,300, which is the second highest on record although slightly down on the £14,500 for those retiring in 2016, according to Prudential Class of 2017 research.

This year’s female retirees are feeling slightly more confident about their finances, however,with 50 per cent saying they are financially well-prepared for retirement, compared with 48 per cent in 2016.

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Meanwhile, as women’s incomes stagnate, men’s expected retirement incomes have shown a fifth consecutive year of growth. Men retiring this year expect an annual retirement income of £20,700 – £900 a year more than last year which is helping drive the gender gap to its highest level for three years.

The Prudential study, which has tracked the retirement income gender gap for 10 years, shows that men retiring this year will be 45 per was at its widest in 2008 when the average expected retirement income for men was 84 per cent higher than that expected by women.

Kirsty Anderson, a retirement income expert at Prudential, said: “It is encouraging that women’s expected retirement incomes this year are the second highest on record.

“However, the gender gap in retirement incomes continues to grow, probably reflecting the fact that many women will enter retirement having taken career breaks and changed their working patterns to look after dependants. Unfortunately, as a result, many women will end up with smaller personal pension pots and some are also likely to receive a reduced state pension.

“For anyone who takes a career break, maintaining pension contributions and, where possible, making voluntary national insurance contributions after returning to work, should help to minimise the impact on their retirement income. The best way to secure a good quality of life in retirement is to save as much as possible from as early as possible in your working life."

She said a greater number of women staying in the workforce for longer, and employers increasingly offering more flexible working patterns, meant the outlook looks more positive for women’s retirement incomes in the future.

Anna Sofat, director, Addidi Wealth Ltd in London, said: "One of the main problems in getting people to save in the first place is that people can't access their pension until age 55 and this deters young women in particular from retirement saving, especially those who might want to start a family but are put off by the inflexibility."