"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"
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. This year’s female retirees are feeling slightly more confident about their finances, however, with 50% saying they are financially well-prepared for retirement, compared with 48% in 2016.
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% better-off than women. The gender gap was at its widest in 2008 when the average expected retirement income for men was 84% higher than that expected by 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.
“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. Consulting a professional financial adviser to ensure that retirement financial plans are on track is a sensible route for many.
“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.”
Responding to the research, 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.”
