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Pension System Failing Women, Says Report
By Susan Smillie, The Guardian
April 22, 2005
A Blueprint for Reform is published by Age Concern and Fawcett, a charity that campaigns for equality between men and women, and is put forward as a clear set of guidelines for the next government to follow.
The current pension system fails to take account of women's working patterns, the report says. The charities argue that a system based on a normal working life of 40 years is inappropriate for women, who are penalised for taking time out from work to bring up children and taking on care roles.
Women are also less likely than men to be employed by companies that run occupational pension schemes. And many women are excluded from the pension system because of the gender pay gap, which means that, on average, women earn 82p for every £1 earned by a man (falling to 60p for part-time workers).
Only 16% of newly-retired women have a full basic state pension on the basis of their national insurance contributions, compared with a figure of 78% of men.
"For every £1 received by a man in a given pensioner couple, a woman receives just 34p, and the report says one in five single women pensioners lives in poverty.
The report suggests that the system could be reformed to allow women to build up their own entitlement to a pension, rather than having it tied to a husband or family. This could be achieved, according to the charities, through a universal pension system with a system of credit for carers or those on low incomes.
The publication goes on to urge the government to reward people for additional pension saving and to offer protection from means-testing for those with full state pension entitlement, as it acts as a disincentive to saving.
The report calls for "a second state pension for all" to be reformed to include people who are not covered by a private pension and to help those who cannot afford extra contributions, "benefiting the poorest the most".
The charities are also calling on the government to raise the full basic state pension from £82.05 to at least £109 a week.
While the government has recognised the scandal of women's poverty in retirement, it has failed to act on the issue, say Age Concern and Fawcett.
"The major political parties recognise that there is a scandal around women and pensions," said Michelle Mitchell, head of public affairs at Age Concern. "But we need action and not words."
"Many women are angry that the system fails to give them a decent income and it is an issue that is likely to affect their votes on polling day."
Plans to bring the pension age for women to 65 from 2010 would lead to an "expectation of equality with men", said the report, but would not improve the situation for modern women.
"Women tend to receive lower pensions because they earn less than men during their lifetimes. Increasing the pension age will not change this and will do nothing to reduce the number of pensioner women living in poverty," said Dr Katherine Rake, director of Fawcett.
The charities recognised that the government had gone some way to easing poverty amongst women pensioners with the introduction of pension credit, which has lifted 1.8m pensioners out of poverty (three-quarters of whom are women).
But the pension credit system further complicates an already complex system, and many people fail to claim benefits simply because they are unaware they are entitled to extra money.
The latest government figures show that for 2002/3, 550,000 single women pensioners were living below the poverty line because they didn't claim all the benefits to which they were entitled.
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