Women need to work seven months longer than men to retire on a pension income of the average industrial wage for women of £22,627 a year, due to falling annuity rates, according to the AXA Wealth Pension Index.

While UK adults expect to retire at 65, the index found that men need to work until they are 70 to reach the ‘target pension’ equivalent of the average industrial wage for men of £31,362.

The gender gap has increased the length of time women need to work by 12 months in five years, due to lower average earnings in 2007 when women could reach the same level five months before men. To achieve this income, women would need a retirement fund of over £400,000.

AXA also said the EU Gender Directive coming into effect will equalise annuity rates between men and women as providers are no longer allowed to factor in gender differences in life expectancies.

“The growing gap is particularly interesting in the context of the directive,” AXA head of guaranteed distribution Simon Smallcombe said. “While the directive will see insurers prohibited from using gender-based factors to determine and set annuities and other premiums, this will cause consternation and likely further delay women’s retirement.”

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