The gender pensions gap narrowed by £40 per month in 2021 but there remains a “long way to go” to reach pensions equality, equity release lender more2life has stated.

This comes as new research published by more2life and economics consultancy Cebr revealed that men in the UK are still enjoying a retirement income 37% higher than women.

The average UK man over the age of 55 has an annual retirement income of £19,536 after tax, while the equivalent figure for women is just £14,208. Based on current life expectancy data from the Office for National Statistics (ONS), this means that women stand to miss out on an additional £170,496 compared to men in retirement.

more2life suggested that the trend is more evident among older demographics and is not reduced by cohabitation, with men aged over 75 and living with their partners receiving retirement incomes of almost £10,000 more per year than women.

Despite the lower incomes in retirement, women are also contributing a higher portion of their monthly income to their pension than men. The latest research highlighted that on average, women save 5.1% of their earnings compared to men at 4.9%. However, lower salaries mean that women are still contributing less to their pension in absolute value, with women contributing £2,360 annually, compared to £3,169 for men.

This means the current gender pension gap equals £444 per month – an amount that more2life stated could have a significant impact on an individual’s lifestyle, particularly amid continued rising living costs across the UK.

Director of manufacturing and adviser proposition at more2life, Les Pick, commented: “While it is good news that the gender pensions gap did narrow slightly in 2021, this is barely enough to make an impact and we still have a long way to go before we reach true pensions equality. It is also particularly frustrating that despite being more focused on putting money aside for the future, women find themselves worse off in retirement.

“The disparity often leaves women in search of ways they can augment their retirement income, especially as more and more over-55s are looking to gift funds to loved ones to help them on the property ladder, or to deal with rising costs of living.”

The research, based on findings 1,000 UK adults over the age of 55, also found that women receive or expect to receive far less income from savings accrued across various types of pension. From a defined benefit or final salary pension scheme, women receive 29% compared to men at 49%. In annuities, they receive 7% compared to 18%, and in pension pot drawdowns just 20% compared to 23% for men.

more2life highlighted that the pensions gap enables men to not only save more during their working lives, but also during retirement too. The difference in personal savings stands at 34% for women compared to 46% for men, and 11% versus 21% for personal investments.

“To help close this gap and ensure that all retirees and over-55s have the later life income they deserve, advisers and consumer champions must work to increase awareness of the various financial options available to help,” Pick added.

“Improved financial understanding and education on how later life lending can augment income, create more financial flexibility, and help mitigate the effect of the gender pensions gap is essential for the UK’s financial future.”

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