New research has highlighted a growing retirement income gap between men and women, which has been exacerbated by the pandemic.
According to the Office for National Statistics (ONS) life expectancy calculator, at age 55:
- Men have a life expectancy of 84 years, with a 1 in 4 chance of surviving to 92.
- Women have a life expectancy of 87 years, with a 1 in 4 chance of surviving to 94.
The three year longer life expectancy means that a woman aged 55 who stops work at the age of 67 – the State Pension Age following the next increase – will, on average, spend 20 years in retirement, over a sixth longer than her male counterpart. You might therefore expect that on average, women would need to make greater pension contributions and have correspondingly larger pension pots.
Recent research by the Centre for Economics and Business Research (Cebr) found that women aged 55 and over contribute more to their pensions than men – 9.4% of income against 8.3%. However, the Cebr also discovered that women’s prospective pension pots are much smaller than men’s because their average earnings are 35% less.
In terms of the total pension income they will receive, the Cebr calculates women will be nearly £184,000 worse off than men come retirement, despite living longer. That gap is over £26,500 wider than just one year ago. A likely cause of the increase is the pandemic, which has had a greater economic impact on women than men. For example, HMRC data shows that there was a consistently higher number of women than men furloughed between July and December 2020, even though men are more than twice as likely to be employed than womens. In part, the higher women’s furlough coverage reflects the fact that more women than men worked in sectors hardest hit by lockdown, such as retail.
Whatever your gender, monitoring your projected pension benefits is a vital part of retirement planning. If you are not sure how much your pension benefits currently amount to, we can help you find an answer by contacting us on 0114 266 4432 or [email protected]