Its latest Pension Trends report found that in September 2010
fewer than half (48%) of female pensioners received a full basic
state pension (BSP), compared with 87% of male pensioners.
Many women in the current generation of pensioners failed to
build up full or near-full BSP entitlement under a previous system
in place before April 2010, mainly because of broken work histories
and part-time work patterns, the ONS said.
However following changes to the law, 95% of women reaching
state pension age (SPA) in Britain in 2030/31 are expected to
receive a full BSP.
The Pensions Act 2007 changed the rules on building up
entitlements to the BSP, including cutting the number of years
needed to qualify for the full pension.
The "purchasing power" of the BSP is also forecast to rise, the
ONS said, following the Pensions Act which re-linked state pension
increases to earnings.
In 2010 the Government introduced the "triple lock" policy,
guaranteeing that BSP will be increased each year by average
earnings growth, inflation or 2.5%, whichever is higher.
Forecasts by the Department for Work and Pensions (DWP) suggest
that by 2030 the purchasing power of the BSP would increase by
almost half.
However it is also suggested that 60% of the female baby boomers
reaching state pension age between 2016 to 20 will have
entitlements of less than £140 per week in 2011/12 earnings terms,
the ONS said.
ONS head of pensions analysis Sarah Levy said: "In the long run
things look set to improve in the number of women receiving basic
state pensions.
"The legislative changes come in gradually and we have still got
a large number of people who retired under the old system."
Earlier this month, the Government announced changes to the
planned increase in the state pension age, saying that tens of
thousands of women would benefit at a cost of more than £1
billion.
The DWP said a plan to raise the state pension age to 66 in 2020
would be delayed by six months from April 2020 to October 2020.
Around 245,000 women and 240,000 men would benefit, including
33,000 women who would have experienced a two-year rise in their
state pension age, the Government said.
However unions said the move gave "precious little comfort" to
women, while experts warned women's pensions plans would be thrown
into disarray.
Pensioners have been lobbying Parliament for increased rights in
retirement, including a higher state pension.
The National Pensioners Convention (NPC) is pressing for changes
including a National Care Service, paid for through general
taxation, and a winter fuel allowance of £500 per pensioner
household to help old people pay rising energy bills.
The NPC has said Britain's state pension was among the least
adequate in Europe, and sixth from bottom out of the world's 46
most developed countries.
The ONS today also released its Occupational Pension Schemes
Survey for 2010, which found that active employee membership of
such schemes is on a slide to levels not been seen for half a
century.
The highest number of active members was recorded in 1967, when
there were 12.2 million.
But by last year there were 8.3 million active members - the
lowest level since the 1950s, the ONS said.
Since 2004, public sector active membership has overtaken
private sector active membership as numbers in the private sector
have fallen sharply.
In 2010, almost two-thirds of active members were in the public
sector, the ONS found.
Average contribution rates in the private sector in 2010 were
lower in defined contribution schemes than in defined benefit
schemes.
Defined benefit occupational pension schemes are those in which
the rules specify the rate of benefits to be paid. The most common
such schemes are "final salary", but "career average" schemes are
on the increase.
Defined contribution schemes, also known as money purchase
schemes, are ones where the benefits are determined by the
contributions paid in and the investment return.
The average employee in a defined benefit scheme contributed
5.1% of their salary (excluding bonuses) to their pension, compared
with 2.7% in defined contribution schemes.
Typical employer contribution rates were 15.8% in defined
benefit schemes and 6.2% in defined contribution schemes.
Unison said the figures revealed that not enough people are
saving for their later years - storing up a "huge benefits
timebomb" for the taxpayer.
General secretary Dave Prentis said: "This survey shows just how
few private sector workers are saving for their retirement.
"But for top bosses in the private sector, it is a different
story. They award themselves generous pensions with low retirement
ages, but shut their schemes to staff - leaving them facing poverty
in their later years, with the only lifeline means-tested
benefits.
"Even though this will cost taxpayers billions, it is used to
attack pensions rights in the public sector."
He added: "What our country really needs is a decent pensions
deal for all workers.
"Unison is campaigning for the pensions rights of people in the
public and private sector - all workers should be able to save for
dignity in their retirement."
Minister for Pensions Steve Webb said: "It will be decades
before women see equal outcomes to men in their basic state pension
and state second pension.
"This is why reform is so crucial. A flat rate pension set above
the level of the basic means test - currently around £140 - would
reduce the need for means testing and would ensure that women are
no longer penalised for taking time off work to care for their
families."
Joanne Segars, chief executive of the National Association of
Pension Funds, said: "People are thinking about today and putting
tomorrow on hold, and unfortunately saving into a pension is being
seen as a luxury.
"The exodus is especially noticeable in the private sector,
where confidence in pensions is running at a record low.
"People are being put off by stock market turmoil, falling
annuities, and mistrust of the pensions industry's fees and
charges.
"While it's understandable that spending gets prioritised during
difficult times, it's essential that people don't forget about
their retirement. The UK is on a collision course with its own old
age."
She added: "Landmark reforms to auto-enrol all workers into a
pension from next year will make a big difference.
"Five to nine million people are set to save into a pension for
the first time, or to save more."
TUC general secretary Brendan Barber said: "The shocking decline
in private sector occupational pensions shows the folly of calls
for public sector pensions to be equalised with those in the
private sector. This would simply be a race to a very grim
bottom.
"Making public sector pensions more like those in the private
sector would mean taking pensions away from most women and low-
paid workers in the public sector, while giving top public sector
staff the boardroom bonanza pensions enjoyed in the private
sector."
PA
Comments