A quarter of women will rely on partner’s pension in retirement
Vast numbers of women could be risking financial independence in retirement because they expect to rely on their partner's pension when they come to retire, according to Prudential's latest ‘Retirement Shock' research.
It has found that more than one in four women (28 per cent) aged 40 and above but not yet retired who live with their partner/spouse, say they will be relying on an income from their spouse or partner's pension as their main source of retirement income, compared to just four per cent of men.
A further one-fifth (22 per cent) of these women say they will be relying on the state pension and other benefits for their main retirement income.
Despite more than a quarter planning to rely on their partners' pensions, the research shows that a third of these women (34 per cent) say they either do not know or understand the retirement savings details and benefits of their spouses. The research shows 62 per cent of working men aged 40-plus living with their spouse or partner have pensions that will provide an income for them alone.
Gender gap to stay
Prudential research already shows that women planning to retire this year expect an estimated average retirement income of £12,200 a year, while men expect to receive an estimated average income of £19,600.
Prudential believes the relatively high level of ‘third party' pension dependency could prevent the gender gap from closing in future and could leave many women in a financially exposed position. It is urging those women who expect to rely on other sources for an income in retirement to take action to ensure a degree of financial independence.
Take control now
Vince Smith-Hughes, head of pensions development at Prudential said: "Relying on someone else's pension and savings and the meagre amount provided by the State to support you in retirement is an extraordinarily risky strategy. It is understandable that many women do not have retirement savings of their own but while they're still working and have got many years to go before they retire then now is the time to take control of the situation and their own destiny, and start making retirement savings plans."
Gemma Goodman, head of operations at The Annuity Bureau added: "The time has long gone when women could expect to enjoy financial stability in retirement by relying on their husband's pension. I would strongly advise women - and men - to sit down with your partner and start talking about retirement plans and discuss how you can pool your retirement savings so your collective finances will support both of you in retirement.
"If you're in any doubt or feel confused about retirement planning, go and see a financial adviser, and do it sooner rather than later. Retirement planning is not something you should leave until you're in your fifties or sixties."
To help couples understand the sorts of conversations they should have with their spouse or partner, Prudential has launched an online guide at pru.co.uk/couplesconversations, which also features a short video.
Poverty line
Earlier this year, Prudential also carried out research which found that more than a third of women (35 per cent) planning to retire in 2010 will receive an annual income below the poverty line which, according to the Joseph Rowntree Foundation, is £13,900 a year before tax.
But by comparison the research also found that 41 per cent of women who were planning to retire in 2010 said they felt financially prepared for retirement.