Many state pensioners are facing a significant financial shortfall, with some missing out on as much as £70,000 over a 20-year retirement.
According to a new analysis from Money Mail, this gap is due to three main factors: region, age, and gender.
Regional disparities: A North-South divide
Pensioners in different parts of the UK were found to receive vastly different amounts from the state.
For instance, the analysis showed men aged 85 to 89 in the East of England receive an average of £12,130 per year in state pension, while women aged 75 to 79 in the North East get just £8,625 per year.
This £3,500 annual difference means that over two decades, some pensioners in the North East will receive £70,000 less than their counterparts in the South.
The regional divide in state pensions stems from wage differences and legacy rules. Many pensioners were “contracted out” of the state pension, paying lower National Insurance contributions in exchange for higher workplace pensions, which can leave them better off overall.
Steve Webb, former pensions minister and partner at LCP, noted that these differences also reflect the regional difference in job types. Those in senior and public sector roles were more likely to be contracted out. In regions like East Anglia and the East Midlands, where such jobs are fewer, men might receive slightly higher state pensions but generally have smaller workplace pensions, meaning they aren’t necessarily wealthier overall.
However, these disparities are diminishing under the new state pension system, which offers a flat rate to those with 35 years of NI contributions.
Age differences: Older pensioners often receive more
Pensioners who reached retirement age before 2016 are generally better off than those who retired later.
This is because they are on the old state pension system, which allows for additional income through schemes like Serps (state earnings-related pension scheme).
Older retirees in their 80s and 90s can receive up to £20,176 annually, much higher than the maximum £11,502 for those on the new state pension.
Those aged 85 to 89 have the highest average weekly income at £210, compared to £194 across England and Wales.
Gender inequality: Women receive significantly less
There is a longstanding gender gap in state pensions, with women consistently receiving less than men.
Women aged 75 to 79 and 80 to 84 receive nearly £2,000 less per year than men of the same age.
This disparity is even more pronounced for older women, who often retired under the less generous old state pension rules, which did not account for time taken off work to care for children or relatives.
The gender pension gap is smallest among recent retirees, with women aged 65-69 receiving £300 less per year on average than men, and those aged 70-74 receiving £1,100 less. While the 2016 changes have slightly improved pensions for younger women, the gap remains significant across all age groups.
These disparities are deeply rooted in the legacy pension systems and the socio-economic conditions that have historically disadvantaged certain groups, particularly women and those in lower-wage regions.
While the newer state pension system introduced in 2016 aims to address some of these issues, millions of pensioners across the UK continue to feel the impact of these historical inequalities.
