New research by Prudential has shown that the gap between men and women’s retirement income is narrowing. However this is not because retirement incomes for women are rising, but because they are falling for men.
The research showed that the average retirement income, from all sources of pension, is £15,500 per year; this figure has fallen by £1,100 over the past year alone and is now at a five year low.
Pension gender gap
Perhaps unsurprisingly men have a higher average pension income than women.
A man retiring in 2012 could expect to receive an average pension income of £18,000 a year, significantly higher than the £12,250 figure for a woman.
The gender gap is narrowing, although this is more down to male incomes falling that those for women rising.
Understandably more women, 49% of those surveyed, than men, 40%, said they had trouble making ends meet.
Why do women have lower pension incomes?
Retirement experts point out that there are a number of possible reasons why women have lower pension incomes than men.
Firstly many women, often because they have stayed at home to bring up children, have an incomplete National Insurance record and therefore do not qualify for a full State Pension.
Secondly, women who have stayed at home, or perhaps worked part time, may have benefited less than men from workplace pensions. Furthermore women statistically earn less, which leads to lower pension contributions and smaller pension incomes.
Finally, Annuity rates are generally worse for women than men due to their increased life expectancy. A quick quote on a pension calculator will show just how much lower female Annuity rates are compared to those for men.
Vince Smith-Hughes of Prudential said: “The pension gender gap appears to be narrowing, but there is still a long way to go.”
He continued: “Not only does the gap remain stubbornly wide, but anticipated retirement incomes have this year hit a five-year low for both men and women.”
“The practical steps that women can take to improve their retirement income prospects include maintaining pension contributions during career breaks and, if possible, making voluntary National Insurance contributions after returning to work.”