Women retiring this year can expect their income to be one third less than their male counterparts, according to new research from Prudential.
The average man retiring in 2012 can expect an income of £18,000 compared with just £12,250 for the average woman.
Regional variations in retirement income
There are considerable regional variations, with the gap at its widest in the South East, where women planning to retire this year expect to have £7,878 less income a year on average than men – £12,259 compared with £20,137. The gap is smallest in the North West, where women can expect to retire on an average of £13,087 a year, compared with £15,632 for men – a difference of £2,545.
Pension gender gap shrinking
Although still significant, the gap does appear to be getting smaller: last year’s survey showed a gap of £6,500 and in 2010 it stood at £7,400. The European Directive on gender equality, which will come into force in December, should also make a difference. This rule change which states that men and women must be offered annuity rates on equal terms will end current practice which sees women normally getting lower rates because on average they live longer than men.
- Enhanced annuities: if you’re in poor health or have a medical condition, you may qualify
Five-year low in retirement income
The research also highlights a five-year low in retirement incomes for both men and women, with the average pensioner living on £15,500 including private, company and state pension, compared with £16,600 in 2011.
Prudential’s Vince Smith-Hughes said: ‘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.’