Research from the financial services company Prudential has revealed for women retiring this year, the annual income gap can be expected to be as much as 50% less than men’s annual income.
Stubborn gap in retirement incomes
The new research from Prudential looked into how the gap in average annual incomes in retirement between men and women has advanced. Initially, the research is positive in that the gap has shrunk somewhat since Prudential last presented figures on this issue. In 2010, equivalent occupations could have seen men receiving approximately £19,600, whilst women could be waiting for a retirement income of £12,200. However, a year before this, in 2009, these women were expecting an income of £13, 700.
For women retiring this year, an average annual income received by a woman could be around £12, 900, whilst for a man doing an equivalent job his annual income could be as much as £19,400. This suggests that whilst there was improvement in the last year, we still haven’t seen income figures increase for women as much as has been hoped.
Reasons for this pension gap is multi-faceted, but for many women, the reason seems to be that alongside being paid less for their employment, women are more likely to take breaks from their jobs to care for relatives, or to look after their children. Their pensions are resultantly lower than men’s.
“Collision course with retirement”
Responding to the research, head of business development at Prudential, Vince Smith-Hughes, stated, “It is good news that average retirement incomes for women have risen, but unfortunately the gender gap remains stubbornly wide. There are a number of actions that women can take to help to boost their retirement income. For example, it is a good idea to maintain pension contributions during any career breaks and to explore making voluntary National Insurance contributions after returning to work.”
Chief executive of the National Association of Pension Funds also commented on the situation, saying, “Sadly many women lost out on the chance to build their pension when they left work to start a family, and too many are reliant on their husband’s pension. It’s important that everyone has a pension in their own right. ‘The gender gap may have narrowed slightly, but our society as a whole remains on a collision course with its retirement.”
She continued positively, “Government plans for a simpler, more generous state pension should help, as will the introduction from 2012 of automatic enrolment into a workplace pension.”
We will no doubt see from Prudential research in years to come, whether the government plans do have the positive effect on women’s pension that is hoped for.
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