Money

Pensions

Women missing out on state pension

Woman and her laptop

Women have long suffered at the hands of the state pension system due to harsh rules which mean many will be paid nothing in their old age, writes Holly Thomas

It is estimated that just 14 per cent of women have a full basic state pension in their own right.

The Government's rule is that anyone who has paid less than 25 per cent of their state pension contribution - that is, women with less than 10 years' National Insurance contributions - gets nothing from the state, so any contributions they make are wasted.

This rule is being scrapped from April 6, 2010, but still applies to women retiring until then. So, women born before 1950 could lose out if they have taken time off work to have children and raise their family, or perhaps to care for relatives.

Many of these women are going to be pushed into being means tested by the Government and therefore lose any personal pension savings.

Pensions expert Ros Altmann said: "The whole state pensions system is a mess. It is designed by men, for men.

"Scrapping the 10-year rule in such a way means there's a whole group of women the wrong side of the cut off date that are not going to get their full entitlement in retirement. It makes a difference of many pounds per week for the rest of their life."

Traditionally, women were expected to rely on their husbands to provide for them and to worry about money, savings and pensions. Times have changed and this is no longer the case across the board.

The rising divorce rate means an increase in the proportion of single mothers and longer life expectancy so a growing number of women are likely to be on their own later in life.

It is estimated that 38 per cent of 60-year-old women will be single by 2021, so it has never been more important for women to get to grips with their finances.

Altmann said: "The state pension system seems to regard the years women spend at home caring for children as somehow less valuable to society than years spent in the labour force earning and contributing to National Insurance. This is grossly unfair.

"Women who are not in the labour force are fulfilling roles needs by society, and should not be discriminated against by our state pension system."

Experts fear that women who are due to retire before April 2010, were in the past advised by employers to stop paying National Insurance contributions once they were married, without explaining the implications.

* Written by Holly Thomas. Holly is Deputy Personal Finance Editor at the Daily Express and Sunday Express. Holly's views represent her own opinions and are for general information only. Always seek independent financial advice.