Sexual equality? In pensions, it hasn't happened

How can you save when you have to take time off? The system is punishing millions of women

Amid the voices of dissent that greet the Government's plans for pension reform, due to be announced this week, will be ones with a particular tone - female.

Despite an encouraging leak late last week that the White Paper proposals will include a cut in the number of years required (from 39 to 30) for women to qualify for a full state pension, the document is unlikely to feature a reform recommended by Lord Turner in his report on Britain's long-term savings crisis: the introduction of a universal basic pension.

This policy - based on residency and not on contributions - would do away with the need to rely on years of working for entitlement. At a stroke, it could benefit hundreds of thousands of women struggling to secure funds for their retirement because they haven't been able to build up enough contributions due to lower pay and time off for children.

Although the female-friendly plan had secured support from the National Pensioners Convention as well as Lord Turner, its cost and complexity is likely to rule it out, warns Tom McPhail of independent financial adviser (IFA) Hargreaves Lansdown.

"A universal pension would be the single best thing that the Government could do for women's pensions, but it is unlikely to happen any time soon."

The White Paper will, however, offer some details of how a separate national pension savings scheme (NPSS) might work. This other major Turner suggestion would mean that all employees who are not already members of a pension plan would be automatically enrolled into a scheme - with an opt-out if desired - and pay 4 per cent of their salary in return for a 3 per cent contribution from their company and 1 per cent from the government.

While that might encourage more women to put money by for their retirement, it will only work for those who are in a position to do so.

"The NPSS will not be enough on its own," says a spokesman for the Fawcett Society, which campaigns on women's issues. "Many women simply earn nothing at all, or too little to save."

That women are much poorer than men in retirement is due to a miserable mix of factors.

First, the basic state system in effect punishes women for taking time off work to have children by limiting the amount of national insurance contributions they can build up.

Second, even when they are in a full-time job, they tend to earn less than men, so their private pension payments are smaller.

Third, when they return to work after having children, it might well be on a part-time basis, so they have less chance of being offered membership of a company scheme.

And fourth, because they are often dependent on their partners and tend to spend what they earn on their children, they don't make their own retirement provisions.

Churn these ingredients into hard figures and they make a bitter dish. Fewer than one in five women qualify for the full basic state pension, which is currently £84.25 a week, whereas 98 per cent of men are eligible, according to government statistics.

To qualify for the full pension, women need to work for 39 years (men, 44 years). Due to career breaks, it's no surprise that many fall short.

Worse, if a woman retires with less than a quarter of the qualifying years, she won't receive anything at all under what is known as the "25 per cent rule".

Today's figures suggest two million women have failed to build up any basic state pension entitlement. Single female pensioners are the poorest of all, with one in five living in poverty, reports the Department for Work and Pensions.

For private provision, the figures are no less forbidding. Only 35 per cent of women have a pension fund, according to Investec Private Bank, mainly because they say they don't have any money to spare each month.

Indeed, for every pound of retirement income received by men in a pensioner couple, women get less than 32p, says the Women and Equality Unit.

Everyone, including the Government, agrees there is a problem and the Conservatives have even created the post of spokesman for women's pensions. However, for all the campaigning of the past few years, little movement has been made towards a solution. That, say some in the financial services industry, points to women having to do more to help themselves.

"They retire earlier and live longer than men, but are simply not making enough provision for their futures through sound retirement planning," says Mark Summerfield, the director of savings at Co-operative Financial Services.

Julie Minette, 29, is concerned about her failure to start saving into a pension. Although her employer does offer a stakeholder scheme, she has yet to join.

"I like the idea of the NPSS. I wish they would change it so that it's up to me to opt out of a pension scheme," she says. "A pension seems such a long time away, and looks set to be even later with the retirement age being raised by the Government."

Julie is studying part-time for an economics degree and says she sees that as her "investment for the future".

So what should women be doing to improve their retirement prospects?

Full-time work is not a prerequisite for a pension fund. Even those who earn nothing at all, but rely on a partner for income, can put up to £2,808 a year into a stakeholder plan. Women should ask their partners to make the contributions on their behalf if they are unable to do so.

Meanwhile, home responsibilities protection (HRP), a government programme, can improve state pension benefits. You can claim for each year in which you are off work caring for a child, though these must be full tax years - so it's no help to those who are off for nine or 10 months.

Independent Partners: 10 top tips for retirement. Get your free guide here

Sport
Luis Suarez and Lionel Messi during Barcelona training in August
footballPete Jenson co-ghost wrote Suarez’s autobiography and reveals how desperate he's been to return
News
newsMcKamey Manor says 'there is no escape until the tour is completed'
Voices
Hunted: A stag lies dead on Jura, where David Cameron holidays and has himself stalked deer
voicesThe Scotland I know is becoming a playground for the rich
News
people
PROMOTED VIDEO
Arts and Entertainment
Architect Frank Gehry is regarded by many as the most important architect of the modern era
arts + entsGehry has declared that 98 per cent of modern architecture is "s**t"
Money
Welcome to tinsel town: retailers such as Selfridges will be Santa's little helpers this Christmas, working hard to persuade shoppers to stock up on gifts
news
Arts and Entertainment
Soul singer Sam Smith cleared up at the Mobo awards this week
newsSam Smith’s Mobo triumph is just the latest example of a trend
News
Laurence Easeman and Russell Brand
people
Sport
Fans of Dulwich Hamlet FC at their ground Champion Hill
footballFans are rejecting the £2,000 season tickets, officious stewarding, and airline-stadium sponsorship
News
Shami Chakrabarti
people
Arts and Entertainment
Benedict Cumberbatch has refused to deny his involvement in the upcoming new Star Wars film
filmBenedict Cumberbatch reignites Star Wars 7 rumours
Sport
football
News
news
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Compensation and Benefits Manager - Brentwood - Circa £60,000

    £60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...

    Data Analyst/Planning and Performance – Surrey – Up to £35k

    £30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...

    IT Systems Business Analyst - Watford - £28k + bonus + benefits

    £24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

    Markit EDM (CADIS) Developer

    £50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

    Day In a Page

    Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

    Wilko Johnson, now the bad news

    Former Dr Feelgood splits with manager after police investigate assault claims
    Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

    Mark Udall: The Democrat Senator with a fight on his hands

    The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
    New discoveries show more contact between far-flung prehistoric humans than had been thought

    New discoveries show more contact between far-flung prehistoric humans than had been thought

    Evidence found of contact between Easter Islanders and South America
    Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

    Cerys Matthews on Dylan Thomas

    The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
    DIY is not fun and we've finally realised this as a nation

    Homebase closures: 'DIY is not fun'

    Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
    The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

    Air New Zealand's wizard in-flight video

    The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
    Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

    Pumpkin spice is the flavour of the month

    The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
    11 best sonic skincare brushes

    11 best sonic skincare brushes

    Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
    Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

    Paul Scholes column

    I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
    Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

    Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

    While other sports are stalked by corruption, we are an easy target for the critics
    Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

    Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

    Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
    How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

    A crime that reveals London's dark heart

    How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
    Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

    Lost in translation: Western monikers

    Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
    Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

    Handy hacks that make life easier

    New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
    KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

    KidZania: It's a small world

    The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker