Women could lose thousands under pensions bill

Women will continue to face financial hardship in retirement under a reformed pension system that still discriminates against them, it was claimed.

A new report by the Equal Opportunities Commission (EOC) and Scottish Widows said that the system as it stands fails many women across the UK.

Furthermore, reforms put forward by the Government to bring pension provision up to date will see the imbalance continue, according to the report.

Those who are self-employed or spend long periods caring for others could be particularly hard hit, the authors of the report said.

Irregular working patterns means that women lose out on state and private pensions, with many unable to build up sufficient retirement incomes.

Research revealed that almost a third of women have no private pension and half stop saving for their retirement when they have children.

In addition, women are also far more likely to be working in lower-paid part-time work due to ongoing caring responsibilities, adding to the problems they face when trying to save.

Only 37% are working full time compared with nearly two-thirds of all men, research showed. Of those not in employment just under two-thirds are housewives and 41% care for children.

Even when contributing into an occupational pension scheme, women pay in less on average than their male counterparts, the report stated.

And despite Government reforms aimed at modernising existing pension rules to make them fairer to women and carers, the system will continue to discriminate against women, it was claimed.

Changes to means-testing may result in many lower-earning, self-employed women receiving no benefit from saving for their retirement, the authors of the report said.

Ian Naismith, head of pensions market development at Scottish Widows, said: "Although the state system is beginning to adapt to women's needs, the proposed changes to workplace pensions will still not cater for women's irregular working patterns. Even those in employment may not work full time, which means their pension pot will be severely reduced."

Jenny Watson, chair of the Equal Opportunities Commission, added: "Our pensions system is fit for a bygone age, designed around a male breadwinner in a safe job for life, with a full company pension, a marriage lasting through retirement and a dependent wife."

"Sadly for women today the gender pay gap at work becomes an even bigger pensions gap in later life because the system is unable to cope with interrupted working patterns."

The commission is calling on the government to make "vital changes" to its plans for a Personal Account system, under which employees will be automatically enrolled into a pension scheme.

It wants to see greater flexibility in the proposals that allow for one-off payments and extra contributions so that people can make up for times when they are unable to save.

The Government also needs to increase entitlement to the basic state pension to ensure that women with small savings do not see their provisions cancelled out if their pension does not reach the government's guarantee credit level of £114, the EOC said.