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  • March 2015
03

Women to retire on £4,800 a year less than men

Open-access content Thursday 5th March 2015 — updated 5.13pm, Wednesday 29th April 2020

Women who are retiring this year expect to receive £4,800 less than men in retirement – 25% less than their male counterparts, according to study.

A survey of 7,687 non-retired UK adults aged over 45 (including 1,012 who are planning to retire in 2015), conducted by Prudential, found women planning to retire this year would have an expected retirement income of £14,300, compared with £19,100 for men.

But Prudential said the gender gap was at "its narrowest" since 2009 when the firm started tracking the difference between male and female income expectations. 

The survey also reported that women's expected retirement income this year was 17% higher than last year, while men's expected retirement income increased by 1%.

Prudential said the rise in women's expected incomes was reflected in their "increasing optimism about retirement". According to the survey, 44% of women believed their pension would provide a comfortable retirement, while last year only 29% said so. Half of the women surveyed said they felt financially well-prepared for retirement, compared with just 41% in 2014.

Michelle Cracknell, chief executive of The Pensions Advisory Service, said: "It is great news that the retirement income gender gap is reducing, and we should see the gap continue to shrink in the future as changes in employment patterns work their way through the current generation of working women."

Cracknell said "systematic and cultural issues" such as career breaks, part-time working and multiple low paid jobs could contribute to  "the significant difference" in the amount of pension received by men and women.

Vince Smith-Hughes, head of business development at Prudential, said: "The new rules on how people can take retirement income from April this year and the planned changes to the state Pension that will come into force next year have clearly contributed in helping women feel more confident about their financial prospects once they give up work."

Smith-Hughes warned people who had periods away from full time work would see their pension savings and eligibility to state pension "take a hit".

He added: "There are a number of steps that both men and women can take to further improve their retirement income prospects, including maintaining pension contributions during career breaks and if possible, making voluntary national insurance contributions upon returning to work."

This article appeared in our March 2015 issue of The Actuary.
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