The gap between men's and women's retirement incomes is narrowing, but this is more due to male incomes falling than women boosting their pension pots, a study has found.
The typical sum that men and women expect to retire on in 2012 including their private, company and state pensions has reached a five-year low of £15,500 annually, compared with £16,600 in 2011, Prudential said.
Women retiring this year expect to have a typical annual income of £12,250, around £5,750 less than the £18,000-a-year for a man retiring in 2012, according to the research.
The gender gap has been narrowing since 2010, when it stood at £7,400, something which the study said was mainly due to falls in male incomes. Men retiring two years ago had an expected annual income of £19,600, while women were retiring on around £12,200 a year. Nearly half (49%) of women surveyed believe they will not have enough income for a comfortable retirement, compared with 40% of men.
Low interest rates and quantitative easing (QE) have particularly hit annuity rates, which analysts say has resulted in more than a million pensioners buying an annuity which will pay less for the rest of their lives.
When they retire, workers use their pension pot to buy an annuity from an insurer, a decision which sets the size of their pension for life. Annuity rates are linked to the yields on government bonds, called gilts, which have been dramatically reduced by QE.
Analysts have found that a 65-year-old man with £100,000 could have bought a level income of £7,855 in July 2008, but someone in the same situation this year would only receive an income of £5,923, a drop of just under 25%.
Vince Smith-Hughes, Prudential's retirement income expert, said: "The pension gender gap appears to be narrowing, but there is still a long way to go. Not only does the gap remain stubbornly wide, but anticipated retirement incomes have this year hit a five-year low for both men and women. The practical steps that women can take to improve their retirement income prospects include maintaining pension contributions during career breaks and, if possible, making voluntary National Insurance contributions after returning to work."
The retirement gender gap was found to be widest in the South East, where women retiring this year expect to have £7,878 less income a year on average than men at £12,259 compared with £20,137. It is narrowest in the North West, with women in the region having an income of around £13,087 a year, compared with £15,632 for men, a gap of £2,545.
The study included more than 1,000 people planning to retire this year.
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