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Government Admits Women's Pensions a Scandal
By Helen Rumbelow and Christine Seib, Times
October 21, 2004
The government conceded yesterday that women's pensions were a "national scandal".
Alan Johnson, the Work and Pensions Secretary, said he was so concerned that he was considering moves to a "citizen's pension", so that women got the same benefit no matter how little they worked.
The state pension is based on National Insurance contributions which means that women, who work less in order to raise children, form the majority of the poorest pensioners.
"Women's pensions are, in a sense, a national scandal," Mr Johnson said.
"Only 50 per cent of women get the full basic state pension and yet we have a situation where we expect women to be carers so often."
According to research by the Association of British Insurers, 83 per cent of retired women have an income of less than £1,000 a month, compared with 58 per cent of men.
Mr Johnson told the Commons Work and Pensions Committee that something had to be done about the problem, and he had an "open mind" about a "citizen's pension", based on New Zealand's system.
In New Zealand a flat-rate payment equivalent to about £89.19 a week is made to all people aged 65 and over, as long as they have been living there for ten years. Boosting the income of elderly women means that about 5 per cent of pensioners live in poverty, compared with about 20 per cent of pensioners in Britain.
The system has been championed by the Liberal Democrats, as well as the National Association of Pension Funds and the Pensions Policy Institute. A working party is looking at practicalities and is due to report before Christmas.
Mr Johnson said that he was "not against" such a pension running alongside a contributory system, a move that would complicate the situation. He also said he was committed to preserving the Government's pensions credit, the means testing that is incompatible with the idea of a citizen's pension.
David Willetts, the Shadow Pensions Minister, said he welcomed Mr Johnson's "very frank admission" that the pensions system was not working. "But it is fascinating to watch the Pensions Secretary sitting on the branch of a tree and sawing away," Mr Willetts said. "He is arguing against his own Government's policies, so there will come a time when he has to put up or shut up."
Help the Aged said it hoped Mr Johson would take action to help to lift women out of poverty. "For too long the pension system has reflected a man's world of work and the family arrangements of half a century ago," a spokesman said.
Proponents of the Citizen's Pension say that it would correct the huge disparity between the state pension payments received by men and women. Because women often take time off work to have children and care for elderly relatives, they have fewer years in which to accrue state pension entitlements.
Figures from the Department for Work and Pensions show that the average state pension paid to men is £105.40 a week. Without the state second pension or its predecessor, the state earnings-related pension, this is reduced to £75.33. But for women, the average weekly state pension payment is just £66.76 or £54.74.
To pay for the Citizen's Pension, experts believe that it would be necesary to increase the state pension age to 67, or to simplify tax relief on private pensions. Mr Johnson has ruled out raising the state pension age, despite calls to do so from business groups.
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