Its time for the Government to act on womenís pensions

Women are being let down badly by the current pensions system and, unless major reform takes place, young women just starting out in the world of work are likely to have as little cash in their old age as their great grandmothers did, says a new report published by the TUC today (Monday) bringing together all the hard facts on why women are losing out when it comes to pensions.

íTime for actioní - released on the morning of a major TUC conference on women and pensions - says that a combination of low pay, part time work, jobs that donít come with pensions and shorter working lives mean that, compared to men, women are almost always going to be short-changed in their old age.

The TUC report says that there are more women at work than ever before (56 per cent of women over 16 have jobs, compared to 71 per cent of men), but that more than four in ten (43 per cent or 5.2 million) of these women work part time. And it is working part time that is one of the biggest factors contributing to poor pensions for women, says the report.

Women who work part time earn 22 per cent less than women who work full time, and the pay and pensions penalty paid by part time women in the UK is amongst the biggest in Europe. Only 15 per cent of unskilled women who work part time are in company pension schemes.

Lower rates of pay are a major factor behind womenís pensions disadvantage. Official government statistics show that womenís full time hourly pay is 86 per cent of menís full time hourly pay, and while the quarter of women on the lowest incomes earn 5.86 an hour or less, men in the bottom quarter earn 7.49 or less.

TUC General Secretary Brendan Barber said: Our pensions system was not designed with women in mind. It is out of date and condemns many millions of women to an uncertain and precarious retirement.

Our pensions crisis has a very definite female face with women being penalised and losing out for taking time out of work to bring up their children. The Government needs to act to put a stop to this continuing pensions gender inequality. A few small changes would make a major difference to womenís lives and at a cost that wonít break the bank.

Women tend to be found in low paid jobs such as waitressing, care work, hairdressing, retail, cleaning, and secretarial and admin work. And while over the next decade the number of women employed in traditionally male dominated work such as manufacturing is set to decline, the number working in the caring and education sector is set to increase.

Despite the fact that women spend less time at work building up a pension, so have less money to retire on than men, they tend to live longer than men and will get a smaller weekly pension for the same pensions savings pot. Women make up the majority of Britainís pensioners, accounting for 56 per cent of all those over 60, and over two-thirds (67 per cent) of those aged over 80.

The íTime for actioní report makes a number of suggestions for action:

A compulsory system where employees and employers are all forced to pay into a pensions scheme would make a huge difference to the lives of the many women with little or no pensions entitlement behind them;

The 25 per cent rule that stops women with less than ten years of National Insurance contributions getting any state pension should be abolished;

The Government should allow women to buy back more than the six years of National Insurance contributions that they are currently limited to. Allowing further backdating would allow many women to fill the gaps in their contributions record and increase the level of their state pension;

Given the large numbers of women who work in the public sector, proposals to raise the retirement age from 60 to 65 will disproportionately disadvantage women, and the Government should look again at other alternatives for reforming public sector pensions;

To illustrate the scale of the pensions problem facing women of all ages in the UK, the TUC has pulled together a number of case studies, including:

Julie is the mother of three girls (aged 12, 10 and 7), lives in South East London and works for a childrenís charity. Since leaving school at 18, she has had a variety of different jobs and been to college, but as 40 approaches, Julie has begun to worry about her financial future.

Although she pays in to an occupational pension offered by her current employer, only one of Julieís previous jobs came with a pension, so she only has two yearsí pensions contributions behind her. Julie realises that taking time out of the labour market to bring up her children has put her at a pensions disadvantage, and she says that all she can do is to keep her fingers crossed that her house will prove to be a good financial investment and provide her with the security that she wonít be getting from her pension.

Neither Annie or her identical twin sister, Susan, will have much of a pension to look forward to, but whilst Susan will receive a full state pension, Annie will get almost 30 per cent less. The sisters married on the same day in 1970, and almost immediately Annie stopped work to have the first of her three children.

Nine years later, she decided to look for work, but was unable to find any (it was the 1980s, she lived in rural Devon, and finding childcare for three youngsters was very difficult). Because she wasnít íavailable for workí, Annie couldnít sign on and was therefore unable to make any National Insurance contributions towards her state pension. Susan, however, had her children later, by which time the rules had been changed and even though she was at home raising a family, was able to pay her NI contributions.

Annie returned to work in 1984 aged 36, and was employed for 12 years by a company that provided an occupational pension, but for the last ten years, she has worked in the voluntary sector, and has had no pension. One of her jobs only involved 10 hours work a week and, with a weekly salary of only 60, Annie was earning too little for her or her employer to pay any National Insurance. Now four years away from retirement, apart from a very small occupational pension, Annie will receive a state pension roughly two-thirds that enjoyed by her twin. She thinks this is very unfair.

Although she has 15 years entitlement in an occupational pension scheme behind her, Patricia Lunn knows that at 59 she is going to have to work well beyond retirement age at 60 if she is to have enough money on which to live. With two marriages behind her, the second being violent and abusive, life has not been easy for Patricia and her three children. Although she worked before having her children, none of Patriciaís early jobs came with a pension.

In the 1970s with two young sons and living hundreds of miles from her family, the lack of childcare and the nature of her husbandís work in the armed forces made it impossible for Patricia to work, although she did earn a small amount of money running a local playgroup attached to the naval base on which she lived. Patriciaís third child was born in 1983, and because her second husband gave her very little housekeeping money, Patricia was soon back at the playgroup and working nights in a residential care home just to make ends meet. It wasnít until 1989 that Patricia had the opportunity to join a company pension scheme. She was unable to make any contribution to the scheme herself as she was on a low income and solely responsible for supporting her family.

Her second husband left her with substantial debts and she was forced to pay these by making arrangements with the various creditors in order to keep her house.

Subsequently she also had to re-mortgage her house to buy out her husband. In 2003 the business Patricia worked for was sold, and her final salary pension frozen. Whilst she retained her job within the new company, the new owners offered a stakeholder scheme instead, and she now contributes towards the scheme.

Now with 5,300 a year frozen in her old occupational scheme, an estimated 700 pa expected from the stakeholder scheme and a reduced entitlement to the state pension, Patricia is worried that unless she is able to work for a good few more years - and she isnít sure how easy it will be to find new work into her 60s - she will not be able to afford to keep up the mortgage payments on her house.

As a result of the heavy commitments to home and family over the past years Patricia has not been able to accumulate any savings towards her retirement.