Women are expected to be harder hit by pension deficits than men, forcing many to have to stay working beyond the age of 65.
The 2.76 million planning to retire in 2009 can expect to receive an average annual pension of just £13,671. This is £6,642 less than the average man’s annual pension of £20,313 and equivalent to a collective income shortfall of more than £42 billion, according to figures from Prudential.
As a result, an increasing number of women now plan to work beyond the age of 65, despite the standard female retirement age being 60.
"It's still a shock to see so many women retiring at such a disadvantage to their male colleagues, despite all we know about the causes of pension discrepancies between men and women," said Karin Brown, annuities business director at Prudential.
Women being more likely than men to give up work to care for children or relatives is one of the key reasons behind the pension gender gap. In addition, women earn 17% less, on average, than men, according to the Office for National Statistics.
Laith Khalaf, pensions analyst at Hargreaves Lansdown, says: “Part of the problem is that women do tend to be paid less than men, and in addition many give up work for several years to raise a family. This leaves a gap in their private pension contributions and can leave them financially weaker come retirement.”
Women’s pensions can also suffer as a result of marital breakdown. "The divorce rate which has climbed over the past few decades is expected to keep rising, so we could see an increase in the number of divorced women without a spouse's pension to fall back on," says Brown.
During the divorce process, the parties involved (or the Court) will decide a "fair" split of assets - including pensions.
"For emotional reasons, many women settle for the family home and give up their right to their partner's pension," says Matt Pitcher, a wealth adviser at Towry Law. "This is dangerous, as many find they have neglected their retirement needs, and unable to downsize their home down the line."