Retirement Income Gender Gap Grows by £1,000 in a Year

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The Issue

The retirement income gender gap has risen by £1,000 over the last year, a study found.

Last year, a study found that women are expected to be £5,300 poorer than a man retiring.

According to research from Prudential, a woman retiring will be £6,400 a year worse than a man retiring this 2017.

Women preparing to retire in 2017 expect to have an average yearly retirement income of £14,300 – this is £200 less yearly than the £14,500-a-year income that women retiring in 2016 were hoping to live on.

The Difference

Men’s expected retirement incomes have been increasing for five years in a row since 2015. A man preparing to retire on 2017 can expect to have £20,700 annually to live on average, while a man retiring in 2016 had average earnings of £19,800.

The biggest gender gap retirement pay was most prominent in 2014. Women retiring on that year on average expected to be £6,700 worse off than men yearly.

1,000 people planning to retire in 2017 took part in the study conducted.

The Solution

Kirsty Anderson, a retirement income specialist at Prudential, said:

“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.”

“However, with a greater number of women staying in the workforce for longer these days, and employers increasingly offering more flexible working patterns, the outlook looks more positive for women’s retirement incomes in the future,” she added.

A Department for Work and Pensions (DWP) spokesman 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, three 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.”