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Women and Pensions

Retirement pensions - once a bedrock promise to American workers for a lifetime of toil - are today as endangered as health care benefits and job security. Congress is considering steps to shore up pension guarantees, but often lost in the debate are the particular retirement disadvantages faced by women.

The poverty rate for Americans over age 65 is 12 percent, but for women over 65 it is 27 percent, higher even than the disgraceful rates of poverty among children, which tend to receive more attention. The reasons for the gender disparity are three: Women live an average of six years longer than men, so their resources need to last longer; women are far more likely than men to live alone on a single income; women earn less than men during their working lives and spend more years out of the workforce for child-raising and caregiving.

This structural triple-whammy keeps older women poor. Too often they operate in the mistaken belief that their husbands' pensions will support them in old age. The fact is that three out of five women in America today will reach age 65 without a husband, either through death or divorce. According to the national Pension Rights Center, one out of five older women has social security as her sole source of income.

"Poverty in old age, too many women are discovering, has a distinctly feminine face," says Teresa Heinz, whose Heinz Family Foundation is cosponsoring a series of national forums on the issue.

Times change, but not fast enough. Women are working more than ever but they are still concentrated in lower-income service and social work jobs and part-time positions, and they still spend an average of 11 years out of the job market.

The first private employer pension plan was set up by American Express in 1875. But today, as businesses downsize and unions lose influence, the number of companies offering pension benefits is shrinking. Even those that do are moving away from so-called "defined benefit plans," which pay out a set monthly benefit for life (similar to Social Security) and toward "defined contribution plans," which shift most of the financial burden to the employee. Typically, these 4OI-k-type plans require the worker to contribute before the company will provide any benefit, a difficult hurdle for low-income workers, most of whom are women.

There are prescriptions for change that can make old age more secure for both sexes:

Vest employees sooner. The Massachusetts pension system for state employees considers workers vested in their pension plans only after 10 years of employment. This is especially hard on women, who rarely work 10 years without interruption. The five years required by federal law for private employers is more realistic.

Give credit for part-time work. Federal law requires private companies to offer equal pension benefits to part-timers if they work at least 20 hours a week. But it hardly seems fair that employees who work for 19 hours a week, possibly for years on end, get no credit at all. Hours accrued for pension purposes should be counted more equitably to ensure the system is not rigged against women. US Rep. Patricia Schroeder of Colorado has proposed legislation to cover part-time workers with benefits beginning at 10 hours a week.

There are also steps women can take in their own behalf: The minimum wage bill awaiting President Clinton's signature includes provisions allowing women who work as homemakers to invest up to $2,000 tax-free in an individual retirement account, for a total of $4,000 per couple. Currently, eligible married couples can take-the tax break only for $2,250 a year. Every woman who is eligible should take advantage of this benefit.

Women must become informed about their husband's pension arrangements before they become widowed. By law a surviving spouse must receive 50 percent of her husband's pension, but some workers opt for lump sums or other payout plans. Wives must sign a waiver agreeing to such changes, but they can be unaware of what they are signing away. Legislation requiring the IRS to develop simple, uniform language for these waivers was watered down this year.

In the 1970s, women entering the workforce agitated for pay equity with the slogan "Raises, not Roses." Today, more and more women are focusing on achieving equitable retirements. Their rallying cry: Pensions, not posies.