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Last Updated: Tuesday, 12 August, 2003, 22:56 GMT 23:56 UK
Women face 'pensioner poverty'

By Sarah Toyne
BBC News Online personal finance reporter

Many women may not be able to enjoy their retirement

Generations of women could be facing poverty in old age because they cannot afford to save for their retirement, a study has found.

Only 30% women say they are confident they have a good pension and are saving enough, compared to 46% of men, according to the research from Age Concern and the Fawcett Society.

Women's irregular work patterns, often lower pay and caring responsibilities put them at more risk of ending up in poverty in old age.

The study also found that if given an extra 100 a month in their pocket, just one in 10 women would put it into a pension, with most choosing to pay off debts or spend the cash on children.

Rely on husband

Despite rising rates of divorce and separation, almost a quarter of all women say they are relying on their partner to provide for them in later life.

Even amongst younger women - aged between 25 and 34 - one in five said they were relying on their partner for a pension.

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Married female pensioners receive just a third of the income of their partner, the research found.

According to government figures, only 49% of women qualify for the full state pension, compared with 92% of men.

Katherine Rake, director of the Fawcett Society, called on the government to take action.

"The needs of female pensioners must be at the centre of the Government's strategy for tackling pensioner poverty," she said.

"What is needed is a state pension which is accessible and reflects people's actual living costs."

Reduced pensions

Malcolm McLean, chief executive of the Pensions Advisory Service, said it was difficult for many women to save for a pension.

"By and large women tend not to earn as much as men," he said.

Report recommendations
Make all state pension contributions count
Include more low paid women and men in the National Insurance System
Introduce a better and more flexible system of credits for carers
Close the advice gap with better financial education and information
Better opportunities for women to build-up higher value company and personal pensions

"Many are earning below the lower earnings limit, which means they are not contributing towards a state pension.

"There also tends to be more women in part-time work, and who more often work for employers who do not have occupational schemes."

Married women can get 60% of their husband's state pension, but they must wait until the husband reaches 65.

In the case of a death, the wife effectively takes over her husband's state pension; while a divorcee will get a pension based on the number of years the couple were married, and her husband's National Insurance contributions.

Any state pension accrued in the woman's own right depends on whether she meets National Insurance rules.

Since the late 1970s women who take time off work to bring up children or look after close relations can qualify for Home Responsibilities Protection, which safeguards National Insurance Contributions and pension entitlements.

But there are many women, currently in their fifties, who have missed out on the protection.

Many of these women also elected to pay the married women's stamp, a reduced rate of National Insurance contribution which does not give them a pension in their own right - even though many have worked all their lives.

Some feel incredibly bitter about this, while other women say they signed up in the full knowledge that they would get a reduced pension.

Savings anomaly

The new Pension Credit to be introduced in October 2003 will guarantee a minimum income for pensioners, but could cause other confusion and headaches for women.

The guaranteed element of the credit will replace the current Minimum Income Guarantee (Mig) - and top up a pensioner's income to ensure a minimum income of 102.10 a week for a single pensioner and 155.80 for a couple.

It will provide a welcome safety net for many women who do not have an adequate state pension, but it could cause animosity among women who have worked hard throughout their lives and paid National Insurance Contributions.

As a means-tested benefit, Pension Credit payments are assessed on someone's current income not their National Insurance Contributions.

In practice, it could mean someone who has made little or no National Insurance Contributions can get the same minimum income, as a woman who has made 39 years of National Insurance Contributions.

"For someone on a low income, the guaranteed credit will cover them anyway so it act could be a disincentive to save for a pension.

"This is particularly the case for older women who are thinking of starting a pension plan later in life," said Mr McLean.

The Department for Work and Pensions said it was ensuring that pension reforms improved women's pension rights.

A spokesman said: "We have already introduced a range of policies that directly benefit women in four key areas.

"First in helping women into employment to build up pension rights, second in helping lower paid women, third in helping existing pensioners with improvements to the state system and fourth helping to ensure that women are aware of their pension position and the choices that they face."


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