Analysis of data released by the Government has highlighted the alarming difference in savings between men and women heading towards retirement – and just how long, on average, these savings will last.

The warning comes from interactive investor who say that, according to their analysis of DWP figures, women could run out of money after just seven years in retirement, compared to 17 years for men.

The new data from the DWP reveals that women have (on average) just £81,000 in their pension by age 55-59, compared to £156,000 for men – a glaring gap of 48%.

The gender pension gap was explicitly referenced in the Government’s announcement of a new Pensions Commission. And while it is encouraging to see the gender pension gap earmarked as a key area for reform, time is ticking.

Any changes made as a result of the Commission’s work on pension adequacy will not come into effect for some time. Women, say interactive investor, are still retiring with significantly less pension wealth than men, and that money needs to go further in retirement, given their longer life expectancies.

The key statistics:

The new calculations from interactive investor show that a woman retiring with a pension pot of £81,000 at State Pension Age and with a full State Pension, could run out of money after just seven years, until age 74.

This assumes they withdraw £11,000 income from their private or occupational pension each year and a 5% annual investment growth ­– and that pension withdrawals increase 2% each year, in line with inflation

In contrast, a man who retires at State Pension Age, with a full State Pension and a pension pot worth £156,000, and withdraws an income of £11,000 each year, could see their pension pot last for around 17 years ­– until the age of 84.

Camilla Esmund, Senior Manager, interactive investor, comments: “Women still face multiple and systemic hurdles when it comes to building pension wealth. The pay gap plays a key role here, as do other barriers. They are more likely to work part-time or take time out of the workplace to care for loved ones, leading to a lifetime of lower contributions and the potential for a smaller pension pot in retirement.

“It’s important to acknowledge these challenges because without research and data reflecting the true realities of pay and retirement planning, we won’t be able to address the gap meaningfully

“There are a lot of factors at play here, but this also comes back to the sheer importance of greater pension engagement in the UK. We need to help empower women to take control of their pension wealth at an earlier stage, but also to remind them it’s not too late to make a difference if you’ve spent time out of the workforce.

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