Despite moves to equalise the pay of men and women, new research has shown that this has yet to filter through to people in retirement.
New research from the Prudential has highlighted the large gap between the expected retirement income of men and women.
As part of their Class of 2015 report, Prudential found that:
- On average women expect to receive £4,800 less than men each year when they retire
- Men expect an income of £19,100 per year, compared to women who anticipate an income of £14,300; a gap of 25%
At the same time, additional research from LV= has found that 23% of women nearing retirement will rely solely on the State Pension; this compares to just 9% of men.
The LV= research also revealed that the men have an average pension pot of £131,000, whilst women build up less than 10% of this figure.
There is however some good news, with the gap between male and female retirement incomes at its narrowest since the Prudential’s survey was first conducted in 2009.
The survey also revealed that women retiring in 2015 will be an average of 17% better off than those who finished work during the previous year.
It also appears that women are feeling generally more positive about retirement, the survey found that:
- 44% of women now believe their pension will provide a comfortable retirement, up from just 29% last year
- 50% of women now feel their finances are well prepared for retirement, up from 41% in 2014
Why does the gender gap in retirement still exist?
Whilst the pay gap between working men and women is slowly closing, it is clear it still exists in retirement.
There are a number of reasons why this is the case:
Lower wages It is still true that average male wages are higher than those paid to women, as pension contributions are generally a percentage of income this naturally means men will build up larger pension funds
Career breaks Despite changes over the years, it is still the case that women rather than men, tend to take career breaks to look after children. Not only does this result in gaps in pension contributions, it also is part of the explanation for lower wages being paid to women
Smaller State Pensions It is still the case that many women have gaps in their National Insurance contributions, which may mean they fail to qualify for a full State Pension
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