Women are the poor relations in pensions

by Dr. Ros Altmann

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Older women have not fared well recently. These latest figures paint a picture of women’s continuing struggle to match men financially – between balancing their careers, looking after children and caring for elderly parents women in their 50s and 60s are being squeezed from every angle.

Although women have made enormous strides pushing through glass ceilings in the workplace, the gender pay gap remains, with women in their 50s earning 25% less on average than men their age. When you combine this with much higher unemployment rates amongst older women (a 39% rise in two years), there is clearly still a big gender divide in the workplace.

And older women are also very much the poorer relations when it comes to pensions. Both in terms of state pensions and private pensions, women’s prospects are worse, particularly older women, who have not always benefited from more recent improvements in female pension provision.

In fact, many older women have little or no state pension entitlement as they paid no National Insurance contributions while caring for their children. They also have lower entitlements to Additional State pension due to their lower earnings. And some paid married women’s stamp, not realizing this excluded them from having their own state pension. As increasing numbers of retired women are single or divorced, they have no husband’s pension to rely on.

Similarly, women’s lower lifetime earnings mean their private pensions are lower but then they also receive lower pensions than men for the same amount of saving. These private pensions have been hit further by the Bank of England’s low interest rate policies.

Overall, these figures paint a bleak picture for older women’s retirement income. The Government increased their state pension age unfairly rapidly, with insufficient time to prepare, and we can only hope that the radical State Pension reforms promised in the forthcoming White Paper will propose a new
system that will really be fairer to women.