Women are still getting a raw deal on pensions
THE state pension age for men and women became the same this month. After decades of difference, both sexes now have a state pension age of 65.
Women’s pension age has been rising from 60 to 65 since 2010. But he state pension age for both men and women is rising to 66 by 2020.
Here pensions expert Baroness Ros Altmann gives 10 reasons why women continue to lose out in pensions, compared to men.
1. Women’s state pension age has increased by more than men’s – at shorter notice.
Ros says: “The Government increased the pension age for older women by up to 18 months with only five years’ notice. Men had at least seven years’ notice of a 12-month rise to their age.”
2. State pension triple lock does not cover Pension Credit – so the poorest women pensioners are not protected.
More than half a million people aged over 80, of which nearly 450,000 are single women, receive Pension Credit. This is a means-tested benefit to lift pensioners out of poverty. This income for the poorest pensioners is only tied to earnings, while the new state pension, which pays more than Pension Credit, is triple-locked, so it increased by whatever was higher – price inflation, earnings inflation or a safety-net rate of 2.5%.
3. The very lowest earners (mostly women) are excluded from the state pension.
Ros says: “Tens of thousands of working women do not receive any credit for their state pension.
“Those earning below the £6,032 low-earnings threshold in one or more jobs get no National Insurance credit towards their state pension.
“If they didn’t work, or earned more (between £6,032 and £8,424) the rules allow them to pay no NI but to ‘earn’ credits towards their state pension.
“The NI system excludes those who may have several jobs but each pays less than £6,032.”
4. Women who don’t claim Child Benefit lose their state pension entitlement.
Families where one partner earns more than £60,000 are not eligible for Child Benefit. But mothers must still claim it – even if they know they are not entitled to it – or they will not receive NI credits which build up their state pension entitlement.
5. Women have lower lifetime earnings and therefore have small workplace/ private pensions.
6. Auto-enrolment excludes part-time earnings below £10,000 (mostly women).
Ros says: “Even the new auto-enrolment programme, which ensures all employers must provide workplace pensions, leaves out millions of women. Anyone earning less than £10,000 is not automatically enrolled into a pension.”
7. Low earners (mostly women) often contribute 25% extra for their work pension.
Those earning between £10,000 and £11,850 who are auto-enrolled into a workplace scheme are often paying 25% too much for their pension. If an employer uses a pension scheme operating on a Net Pay basis, then instead of receiving the tax relief they would have if they were in a different type of scheme, they have to pay extra to their pension provider.
8. Occupational pensions may not merge periods of pension service after maternity leave.
9. Many men buy single life annuities that don’t provide for their widow.
10. Women’s pensions are not properly protected on divorce.