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Jun 29, 2017

Women retiring this year will be £6,400 a year worse off than men, according to new research from Prudential.

The “retirement income gender gap”, as the company describes it, has grown by £1,000 since 2016 and is at its highest level in three years.

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Women retiring this year will also be worse off by £200 than women who retired in 2016.

The average retirement income for women this year will be £14,300, slightly down on last year’s average of £14,500.

However, women retiring this year feel more confident about their finances, with 50% telling Prudential that they are financially well prepared for retirement, up 2% from 2016.

Men’s retirement income showed a fifth consecutive year of growth, according to Prudential’s survey.

Men retiring this year can expect an annual retirement income of £20,700, which is £900 more than in 2016. This means they will be 45% better off than women leaving the workplace this year.

The Prudential study has tracked the retirement income gender gap for 10 years. The gender gap was at its widest in 2008, when the average expected retirement income for men was 84% higher than for women.

Kirsty Anderson, a retirement income expert at Prudential, said: “It is encouraging that many women planning to retire this year feel financially well prepared for their years in retirement. In fact, 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.”

She added that the outlook was more positive for women’s retirement incomes in the future, thanks to more employers offering flexible working patterns and greater numbers of women choosing to stay longer in the workforce.

The Department for Work and Pensions argued that more women were now saving for retirement.

A DWP spokesperson said: “Thanks to our pensions reforms we expect 3.6 million women to be newly saving or saving more by next year compared to 2012 and the new State Pension also means that, by 2030, 3 million women will on average be better off by £550 a year.

“But there is more to do to ensure that women have the opportunity to build up the pensions savings they will need, which is why we will be increasing minimum contributions for workplace pensions over the coming years.”

Source: personneltoday.com