If you juggle life and work, will the state be there to catch you?

Millions of women are losing out under our pensions system, says Esther Shaw

More women work than ever before yet they face the threat of poverty in retirement because of poor pension provision in the UK.

More women work than ever before yet they face the threat of poverty in retirement because of poor pension provision in the UK.

Today's young women taking their first steps in the world of work are likely to have as little cash in their old age as their great-grandmothers.

This alarming scenario was raised last week in Time for Action, a new report from the TUC on pensions inequality between men and women.

As they try to balance the demands of work and caring for children, many women are left in danger of being short-changed in their old age, the report argues.

On average, women spend less time than men working outside the home, and they often take part-time employment. They also tend to have lower-paid jobs and work for employers that do not run company pension schemes. As a result, they have less chance than male workers to build up either state pension rights or a substantial private pension pot.

Women have also lost out because of financial dependence on husbands who have either left them or died.

"Our pension system was not designed with women in mind," warns TUC general secretary Brendan Barber. "It is out of date and condemns many millions of women to an uncertain and precarious retirement."

It's a grave problem that has begun to exercise all political parties.

Alan Johnson, Secretary of State for Work and Pensions, recently admitted that women's pensions were a "national scandal". Research from the Liberal Democrats suggests only half of single women hitting retirement age qualified for a full basic state pension (£79.60 a week in the 2004-05 tax year).

There is particular concern at the lack of women's state pension provision. Entitlement to a basic state pension depends on the tally of years in which you make national insurance (NI) contributions.

To qualify for a full state pension, women have to have worked for 39 years (for men, the requirement is 44 years). Of course, many people won't be able to fulfil this quota in today's world of contract working and career breaks, so will get a partial pension instead.

And retiring with less than a quarter of the qualifying years for a full basic state pension (normally less than 10) means you don't receive anything at all. Not surprisingly, most of those who fail this "25 per cent rule" are women.

Although the pension credit (a top-up to the basic pension) and other means-tested benefits are meant to help, more than a million eligible pensioners have yet to come forward to claim them. Some are too proud to do so; others may not know they are entitled to help, or be daunted by the application forms.

Women who don't qualify for a basic state pension may be able to get one based on their husband's NI contributions - although they cannot do this unless their spouse is already drawing his state pension.

Reform of the pension system for women is now, at least, a priority for the Government and the financial services industry.

The TUC's report is the latest attempt to make the Government take action. One recent proposal to win backing from campaigners and opposition MPs is for a citizen's pension based on residency rather than NI contributions. Steve Webb, Liberal Democrat spokesman for work and pensions, says this would put an end to the current discrimination.

Two months ago, the Office of the Pensions Advisory Service (Opas), an independent body, ran a telephone helpline (now closed) aimed at giving women a better understanding of their pension status.

Callers' queries most commonly related to state pension entitlement, pension arrangements after divorce and part-time workers' rights, says Opas's chief executive, Malcolm McLean.

"We would urge all women to take charge of their pension planning, from starting a stakeholder pension to joining a company scheme," he adds.

For women unsure of the right steps to take, there's plenty that can be done straightaway.

To find out your projected state pension, contact Opas's retirement forecast team on the number below.

If you don't think you have paid or been credited with enough NI contributions, it may be possible to make voluntary contributions so you will at least receive some (reduced) basic state pension.

On top of the basic state pension, you may also be entitled to the State Second Pension (S2P), which replaces the old State Earnings Related Pension Scheme and is based on your NI contribution record and earnings. For advice on whether you should opt out of S2P by joining an occupational or personal scheme, talk to a professional financial adviser specialising in this area.

Check also to see whether you are eligible for the pension credit; start by calling the telephone number below.

If you care for a child or a sick or disabled person and are unable to work, you may benefit from the Home Responsibilities Protection (HRP) arrangement. In a nutshell, it reduces the number of years you need to make NI contributions to qualify for the basic state pension. To apply, visit your local social security office for a copy of the form C411 HRP.

If you are a part-timer, check with your employer to see if you are eligible to join its pension plan. And, if relevant, ask about rules on maternity leave.

If you and your husband divorce, a court is required to take the value of any pension held by either spouse into account when the financial settlement is being determined. A range of options is open to the court to decide how the value of the pension is treated, so make sure you know what these are - an independent financial adviser can help here.

Contacts: www.opas.org.uk and www.stakeholderhelpline.org.uk For the Opas retirement forecast team, tel: 0845 300 0168. Pension credit application line, tel: 0800 99 1234. www.pensionguide.gov.uk (website run by the Department for Work and Pensions)