Women planning to retire this year expect to receive retirement incomes that are 25% lower than their male counterparts, according to research by Prudential.
Its Class of 2015 study, which surveyed 7,687 UK adults aged 45 and over who have yet to retire, including 1,012 respondents who intended to retire in 2015, also found that female retirees expect an average income of £14,300 compared with £19,100 for males. This equates to a £4,800 difference.
The survey also found:
- The retirement income gender gap is now at its narrowest since 2009, when the average expectation was £13,700 for female respondents and £20,300 for male respondents, making a difference of £6,600.
- This year’s female respondents have the highest average expected annual retirement income recorded by Prudential’s research, because they expect to be nearly 17% better off than those who planned to retire last year. In contrast, men’s expected retirement income expectations have increased by just 1% since last year.
- More than two-fifths (44%) of females believe their pension will provide for a comfortable retirement, compared with just 29% in 2014.
- 50% of female respondents feel financially 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.
“However, there are systemic and cultural issues that impact on the ability of women to build up retirement savings, such as career breaks, part-time working and multiple low-paid jobs, and they all contribute to the significant difference in the amount of pension received by men and women.”
Vince Smith-Hughes, retirement income expert at Prudential, added: “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.
“However, anyone who has taken significant periods of time away from full-time work can see both their pension savings and their eligibility for the full state pension take a hit.”