Retirement income gender gap to widen

The government has come under fire over plans to bring forward a rise in the retirement age, with unions and campaigners claiming it will leave women tens of thousands of pounds worse off.

The State Pension Age for women is currently in the process of rising from 60 to 65 to equalise with men, with the state pension age for both men and women due to increase from 65 to 66 between 2024 and 2026.

However, under legislation before Parliament, the women’s state pension age will reach 65 by November 2018. The rise from 65 for both men and women will begin in December 2018 and will reach 66 by April 2020.

Unions and campaigners for the aged say that the acceleration of the retirement age will hurt millions of women financially.

“Women in the affected age group - those born between December 1953 and October 1954 - could lose up to several thousand pounds and will have to work for much longer than any of them had intended,” said a spokesperson for the Trades Union Congress.

“Many quite understandably will have been planning their retirement. Now those plans will have to be put on hold”

Age UK said many women will “experience real hardship in the years before they reach their State Pension Age, if they have to use up their savings or live on out of work benefits to cover these extra years because they cannot work through redundancy, ill health or caring for others”.

The call follows the release of more evidence this week of the pension gap between male and females, remaining“stubbornly wide”.

According to research by Prudential, the pensions providers, the average woman retiring this year can expect an annual income of £12,900 compared with an expected income of £19,400 for an average male.

The retirement income gender gap was the widest in the South West of England where retired women expect £11,700 a year less than men. Meanwhile in the South East of England the expected retirement incomes for men and women are essentially equal.

The Prudential study also found that 28 per cent of women planning to retire this year have no savings in private or company pension schemes compared with just 10 per cent of men.

“There are a number of actions that women can take to help to boost their retirement income,” said Vince Smith-Hughes, head of business development at Prudential.

“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.”