According to new research from Aegon UK, just 10% of women in the UK will achieve the retirement income they are aiming for by the time they retire. While this has doubled since April 2015, it remains below the male average of 14%.
The government introduced new pension rules in April 2015 that give people with defined contribution pensions new opportunities to access their pension savings and to use this money in the way they choose from the age of 55. As a direct result, women are saving 14% more into their pensions, while 16% of men are contributing more. Other initiatives such as workplace auto-enrolment may have helped fuel the 5% increase in the number of women who are on track for the retirement.
Steps have also been taken by the government to equalise the state pension age. This means women won’t be able to access their state pensions until the age of 65 from April 5, 2020. However, women currently plan to retire age 63, on average, a year earlier than men.
On average, women have saved £20,000 into their pensions, under half the £52,500 saved by men. Men contribute an average of £85 more a month to their pensions than women, who save an average monthly sum of £170. This means women are saving £1,020 less for retirement than men each year.
Kate Smith, head of pensions at Aegon, said: “Despite encouraging signs for women, the truth is that their expectations are simply not lining up with reality. The value of women’s pension pots is well under half of their male counterparts, but they currently expect to retire aged 63, a year earlier than men.
“This target retirement age comes against a backdrop of an increasing state pension age for women. Over the next four years women’s state pension age will be increased to 65. With this in mind, they’ll need to fund an additional two years of retirement from an inadequate pension pot before the state pension kicks in, unless other income, such as their partner’s salary or retirement savings is available.”