Copyright © Gary J Harding
Narrowing gender pensions gap not all good news
The gap between the amount men and women can expect to receive in pensions is narrowing, a study by Prudential has found.
The gap, however, is due to a reduction in expected male incomes as opposed to women saving more for their retirement.
According to the survey, women retiring in 2012 can expect an average annual income of £12,250, a third lower than the £18,000 for a man.
Although this gender gap of £5,750 fell from £6,500 the previous year, and has been falling steadily since the survey began in 2009, the gap remains significant.
Vince Smith-Hughes, Prudential's retirement income expert, said: "The Pension Gender Gap appears to be narrowing, but there is still a long way to go. 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 average amount that men and women can hope to retire on has fallen to £15,500, despite taking into account private, company and state pensions - the lowest figure for five years.
Pension incomes have taken a knock in recent years due to persistent low interest rates and the effects of quantitative easing which particularly hits annuity rates - the most common method of transferring a pension pot into a fixed retirement income.
Men retiring two years ago would have received an average of £19,600 in pensions, compared to £12,200 for women, forming the largest gender pension's gap the survey recorded. Yet, while both sexes can expect to receive smaller pensions than previous years, the survey also found that almost half (49 per cent) of women believe they will not have enough income for a comfortable retirement compared to 40 per cent of men.
Ros Altmann, director-general of Saga, said women have consistently been the 'poor relations' to men when it comes to pensions. Historically, both state and private pensions are lower for women as they tend to receive a smaller state pension for missing national insurance contributions while caring, and because it is earnings related.
Altmann said that expected Government reforms to the state pension should go towards making the system fairer.
Vince Smith-Hughes advised that women could take 'practical steps' to improve their income prospects including maintaining pension contributions during career breaks and, where possible, making voluntary national insurance contributions after returning to work.
He added: "It is imperative for anyone looking to secure a sufficient income when they retire to begin saving as much as they can, as early as they can, and to do so regularly through life. For those who are still working, it has never been a more important time to save into a pension."
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