Retiring Women Get 25% Less Than Men But Gender Gap Is Closing

New research from Prudential shows that women in the UK who are retiring this year expect incomes £4,800 (US$6,442) lower than men – but the retirement income gender gap is  shrinking.
  • Women retiring in 2015 expect a retirement income 25 per cent lower than men
  • Retirement income gender gap at its lowest since 2009
  • Women increasingly optimistic about their finances in retirement
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Women planning to retire in 2015 are preparing themselves to live on an income 25 per cent lower than their male counterparts, according to new research from Prudential1.
 
The insurer’s annual ‘Class of’ research, which tracks the future financial plans and aspirations of people planning to retire in the year ahead, is now into its eighth year and has highlighted a retirement income gender gap of £4,800 for the ‘Class of 2015’. Women planning to retire this year have, on average, an expected retirement income of £14,300 compared with £19,100 for men.
 
However, the good news is that the gender gap is shrinking and is now at its narrowest since 2009 when Prudential first started tracking the difference between male and female retirement income expectations as part of its ‘Class of’ research.
 
This year’s female retirees have the highest average expected annual retirement income ever recorded by Prudential’s research, and expect to be nearly 17 per cent better off than those who planned to retire last year. In contrast men’s expected retirement income expectations have increased by just one per cent since last year.
 
The rise in women’s expected incomes is reflected in their increasing optimism about retirement – more than two-fifths of women (44 per cent) believe their pension will provide for a comfortable retirement compared with just 29 per cent in 2014. Meanwhile, 50 per cent of women feel financially well-prepared for retirement compared with just 41 per cent in 2014.
 
Michelle Cracknell, Chief Executive of The Pensions Advisory Service2, 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.
 
“Research such as Prudential’s is important in continuing to highlight this ongoing issue facing women pensioners. The Pensions Advisory Service can provide vital support for women planning for their retirement, helping them to make the most of the options available to them, and helping them achieve the best retirement income possible.”
 
Vince Smith-Hughes, a retirement income expert 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.
 
“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 – something that the women of the ‘Class of 2015’ are likely to see as they are from the generation where women were more likely to have stayed at home with the family.
 
“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. A consultation with a financial adviser or retirement specialist could also help people construct a sound retirement plan and secure a more comfortable retirement income.” 
 
Prudential’s Class of 2015 research previously found the average expected annual retirement income for all retirees in 2015 reached a six-year high of £17,000, including income from private, company and state pensions. This is £1,200 higher than the average expected income of 2014.
The Gender Gap from 2009 to 2015 (expected incomes rounded to nearest £50)
Expected retirement year
Expected annual retirement income
Gender gap
Women
Men
2015
£14,300
£19,100
£4,800
2014
£12,200
£18,900
£6,700
2013
£11,750
£18,250
£6,500
2012
£12,250
£18,000
£5,750
2011
£12,900
£19,400
£6,500
2010
£12,200
£19,600
£7,400
2009
£13,700
£20,300
£6,600
 
Notes 
1 Research Plus conducted an independent online survey on behalf of Prudential between 21 November and 4 December, interviewing 7,687 UK non-retired adults aged 45+, including1,012 who intended to retire in 2015.
2 The Pensions Advisory Service (TPAS) works to make pensions accessible and understandable for everyone. It provides independent and impartial information and guidance about pensions, free of charge, to members of the public.

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