Women retire on £5,750 less than men

As women expect to retire on significantly less than their male counterparts, we reveal how you could potentially boost your pension pot.

Women who retire in 2012 expect an annual income of £12,250 compared with £18,000 for men, research from Prudential has found.

Although these figures represent a difference of £5,750, this gap is narrower than in previous years – with last year’s data revealing a discrepancy of £6,500 between the sexes.

The South East has the most significant gender gap of £7,878 and the North West has the smallest at £2,545.

This disparity is a common concern among pensions experts. Dr Ros Altmann of Saga said: ‘Women in the UK have consistently been the 'poor relations' when it comes to pensions.

‘The fact is that in terms of both state pensions and private pensions, women's prospects are worse.’

Although times are certainly tough for both male and female pension savers, there are steps both genders can take to potentially increase their retirement income.

Start early

Saving for retirement is probably one of the last things on your mind when you’re young, free and single. However, this may be the most sensible time to start making contributions.

While it isn’t impossible to build up a nest egg later in life, you would probably need to make larger monthly contributions to meet your savings goals, which could seriously impact your disposable income.

Make the most of tax relief

Paying into a pension fund is one of the most tax efficient ways to save for retirement.

Whenever you pay into a pension pot, the provider reclaims any income tax you have already paid on this money from the government at a rate of 20%.

To put this into context, you receive £100 in your pension fund for every £80-worth of contributions.

Higher and additional rate taxpayers who pay income tax at a rate of 40% or 50% can reclaim any shortfall on their tax relief from HMRC.

Bear in mind, there is an annual allowance on the amount of tax relief savers can claim. At present, you can receive tax relief on up to £50,000 each year.

As well as tax relief on pension contributions, savers can also take up to 25% of their fund as a tax-free lump sum when they retire.

Stop working, keep earning

If you’d like to get out of the house and top up your pension income, you could continue working part time in retirement.

Having left permanent employment, it may be possible to find work as a consultant or even set up a business.

Despite the financial benefits of staying in employment, you may be taxed on any income you receive from paid work. What’s more, this additional money could affect any means-tested benefit such as pension credit.

Can’t I just rely on the state?

According to research from insurer LV=, 28% of Brits over the age of 50 currently have no retirement savings.

Unfortunately, those forced to rely on state benefits could face serious financial hardship.

LV=’s data found that pensioners dependent on state pensions receive up to £5,890 a year less than someone receiving minimum wage.

Although the government currently plans to introduce a universal state pension of £140 per week, this figure may be significantly below your level of earnings when you were in work.

**This material is for information purposes only and should not be considered financial advice. We strongly encourage our readers not to rely solely on this content, but to seek independent advice when making financial decisions.**

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