Tinkering with pension drawdown rules does not change the fact that women are just not saving enough to fund their retirement.
Hot on the heels of a damning report from pensions provider LV= claiming women run out of retirement cash in just five years after giving up work, financial giant The Prudential has revealed women can expect to receive £6,700 a year less pension income than men.
Both firms warn the gap between expected and real pension income between men and women is widening.
The Pru says women retiring this year expect to receive an annual average pension income of £12,200 – compared with £18,900 for men.
The firm also notes that both men and women financial expectations in retirement are increasing.
Unrealistic pension expectations
Last year, women expected a yearly £11,750 pension income and men £18,250, says the firm.
Meanwhile, the numbers from LV= showed average pension income is £8,774 a year, including the state pension, which breaks down to £6,580 a year for women and £10,967 for men.
The figures from both providers show a clear difference between what pension expectations and reality.
Both firms explain the only way people can meet their payment expectations is to save more during their working life.
Women tend to have less chance to save than men because they have more time out of work looking after children and the home, according to both reports.
Vince Smith-Hughes, retirement income expert at Prudential, said: “People obviously expect higher incomes in retirement, but government changes to the way they can draw their money won’t help them meet those expectations if they do not save more.
Rich and poor comparisons
“Women can do more to give more income when they retire, like keeping up pension contributions when they are not working and making voluntary national insurance payments when they are in work and earning.”
Other findings from the Prudential research showed that only 40% of women ready to give up work consider they have enough savings to fund a comfortable retirement, compared with 54% of men.
Only 29% feel they are in a good financial position to retire, compared to 47% of men.
The retirement income gap also varies between regions. The gap is narrowest for women in the North West, who expect to have £13,850 a year retirement income, while men living there expect £15,350.
In London, the gap is wider – £10,500 a year for women and £24,500 for men.
Women in the South West have the lowest retirement income expectation – just £9,650 a year.
Although this may be difficult at times the key for both women and men is to start planning and saving/investing early in life, be consistent, take advantage of any employer matching plan, max out contributions when possible, eliminate debt, avoid risks with your nest egg and plan for multiple streams of income once retired (pensions, dividends, part time work, etc.). There is a great deal of information about retirement available on the web. I use several sites including the site Retirement And Good Living which provides information on finances, health, retirement locations, part time work and also has a great blog of guest posts about a variety of retirement topics.