Sorry, old girl

Pensions are one of the last bastions of sexual inequality. Without careful planning, women can find themselves with very meagre pickings in retirement. By Nic Cicutti

It barely seems conceivable, more than 20 years after sex discrimination was meant to have been relegated to the history books, that women are likely to be much worse off than men at retirement.

Yet, as millions of women will discover, they are likely to face a drastic drop in their living standards when they finally stop work.

A recent survey by Flemings, an investment company, found that 53 per cent of women - some 10 million - will be affected in this way, compared with 40 per cent of men. There are several reasons for this, linked in part to expectations placed on women by society. For example, enforced career breaks by women, usually caused by caring for children or elderly relatives, mean that they are less likely to be able to build up uninterrupted periods of service with employers, ensuring bigger pensions. Their longevity relative to males ensures that if women start personal pensions, they will receive a smaller income.

One bizarre side-effect of equality legislation brought in by the Government in the past few years has been to worsen the position for women. After several European Court judgments in cases brought by women who demanded equal pension rights, the Government equalised retirement ages - by raising that of women to 65. Women under 40 at present will have to wait until 65 for their pension.

It is still possible to do something about your pension. The first step is to obtain an immediate forecast of what pension you will be entitled to by the state. This takes into account the National Insurance contributions you have paid to date.

Fill in form B19, obtainable from your nearest Benefits Office. Complete the form and send it in to the Retirement Benefits Forecasting Unit, Contributions Agency, DSS, Newcastle-upon-Tyne, NE98 1YX.

If you have spent part of your working life at home, check whether the forecast includes Home Responsibilities Protection or Invalid Care Allowance, which both count towards the missing years when you have not been paying National Insurance contributions. Once you know how much you will receive from the state, plan how to make up the difference in terms of how much money you will need at retirement. This means that if you are in work, where possible you should join the company pension scheme, even if you are a part-timer. Ask the personnel officer or a union official for details.

In addition to the basic state pension, there is an additional State Earnings Related Pension scheme, or Serps. This is partly linked to your earnings. In the past 15 years, the Government has acted to cut the amount paid through Serps, while at the same time offering financial inducements to opt out of the scheme.

For those who have high earnings and are in work for long periods, it may make sense to opt out of Serps. The inducements are based on a percentage of what you earn. They are paid into a personal pension scheme and invested. This may allow you to benefit from higher investment returns so that you end up with more money when you retire.

But if, like many women, your salary is low - beware. Opting out of Serps means you might only have a small percentage paid into your rebate-only pension, while taking a career break could leave you vulnerable to flat- rate charges. You could end up with less at the end than you paid in. Talk to an independent financial adviser about whether you should be opting out of Serps. Call 0117 971 1177 for details of an IFA near you.

If you are choosing a personal pension, always look for a pension that is highly flexible. You need something that will not penalise you for stopping contributions and starting them again and which can cope with temporary reductions in premiums. Charges should be spread across the lifetime of a product, not levied up-front.

Again, talk to an independent adviser. Companies with cheap and flexible pension products include Eagle Star, Equitable Life and Virgin.

If you are getting divorced and your husband is a member of a pension scheme, tell your solicitor. You may be entitled to a share of your husband's pension - though he may be entitled to a slice of yours.

Finally, if you are not working but still want to set up a nest egg, don't despair because the law says you can't set up a pension. There are other tax options including Personal Equity Plans, or Tessas, available through most banks and building societies. Once more, talk to an adviser.

Most important of all, don't leave it until too late to prepare for your retirement. Relying on men is never a good idea at the best of times. It becomes even less so when it comes to ensuring a good time when you stop work Nic Cicutti, personal finance editor of The Independent, has written a Guide to Pensions Planning. The 52-page guide, sponsored by Equitable Life, a leading life insurer and pension provider, is available free by calling 0800 137372, or fill in the coupon below