Women are saving a higher proportion of their salary into their pensions, but are still retiring with retirement funds that are almost 40 per cent smaller than men.
New research shows women are becoming more focused on pensions savings, putting in an average of 5.1 per cent of their salary, compared to just 4.9 per cent for men.
But differentials in pay mean that this is not addressing the pension gap. In absolute terms this means women still contribute less to their pension, as these percentages mean women contribute an average of £2,360 annually, compared to £3,169 for men. This pension gap is often further exacerbated by the fact that many women also take periods of time out of the workforce to look after young children or older parents.
The research, by economics consultancy CEBR and equity release lender more2life, found that the men receive £170,496 more in pension income over the course of their retirement – a difference of 37 per cent.
Their figures show the average man aged 55 or over has an annual retirement income of £19,536 after tax, meanwhile the equivalent figure for women is just £14,208. It says that this pension gap has narrowed ,by around £40 a month in 2021, but this is not enough to put pensions on a more equitable footing.
The CEBR says this trend is more evident amongst older demographics and is not reduced by cohabitation, with men aged over 75 and living with their partners receiving retirement incomes of almost £10,000 more per year than women.
The research also found women receive or expect to receive far less income from savings accrued across various types of pension, including DB pension, DC drawdown and annuities.
More2life director of manufacturing and adviser proposition Les Pick says: “While it is good news that the gender pensions gap did narrow slightly in 2021, this is barely enough to make an impact and we still have a long way to go before we reach true pensions equality.
“It is also particularly frustrating that despite being more focused on putting money aside for the future, women find themselves worse off in retirement. “
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