A Prudential report, released on 30 May, shows that while women’s expected retirement income has hit a record high and the gender gap is shrinking, those who retire in 2018 will still be 29%, or £4,900 (€5,595, $6,652), annually worse off then men.
A long way to go
Kirsty Anderson, a retirement income expert at Prudential, says the research shows the retirement income gender gap is still too wide, with women struggling to match the incomes generated by men.
For the last 11 years, Prudential has tracked the finances, future plans and aspirations of people planning to retire in the year ahead in its Class of research. It highlights the persistence of the gender gap with men expecting to retire on an average annual income of £21,800 compared with £16,900 for women.
This means the gap has now narrowed to the second lowest on record, with the smallest disparity of £4,800 recorded in 2015.
Prudential says this is a significant improvement when compared with the widest gender gap in 2008, when the average expected retirement income for men was 84%, or £9,500 higher than that expected by women.
Further, both men and women are now retiring on a higher average annual income in 2018 than any other time over the past 11 years. Women retiring this year will be £2,600 a year better off than last year, while men will be £1,150 better off.
“It is really encouraging to see that the retirement income gender pay gap is shrinking over consecutive years and women are starting to close the gap on men. It is also extremely positive news that expected retirement incomes this year are the highest on record,” Anderson said.
“As working patterns continue to change and become more flexible and shared parental leave is more widely encouraged by the government agenda and employers, the future looks positive for narrowing the retirement gender gap.”
Despite retiring with a record high income, women in the Class of 2018 are not feeling quite as confident about their finances than previous years, with 47% stating they are financially well-prepared for retirement, compared to 50% in 2017.
Women at risk
Reacting to the findings of the Class of report, Samantha Seaton, chief executive of Moneyhub, said: “Too many people are still not saving enough for their future, with women at particular risk of facing retirement without enough to live on.
“While auto-enrolment has made an impact, there is a real risk that if we fail to engage consumers with the need to save, when contributions increase next year, many will opt out.
“The onus is on providers, employers and government to do more to help people understand their money,” Seaton said.
The Joseph Rowntree Foundation’s (JRF) Minimum Income Standard says the income for a single pensioner should be at least £9,998. However, findings show that one in six (16%) women will be retiring with an income below this standard, compared to just one in 10 (10%) of men.