Compulsion misses the point: the pension needs of women

The current debate about increasing the level of compulsory pension contributions is a contentious one for individuals, trade unions, employers and the state. While trade unions urge increased compulsion, and both employers and government resist this, the needs of a large section of society are being overlooked. Due to women’s typically lower pay, part time employment and interrupted careers while caring for others, compulsory additional payments into private pension schemes would not address the problem of women’s low pensions in retirement.

In his recent speech at the Labour Party Conference Gordon Brown quoted a poem with the lines:
“It is the hands of others who tend us when we’re sick and lift us up when we fall;
“It is the hands of others who bring us into the world and who lower us into the earth.”

These hands are usually female, yet it is these self-same hands that are most likely to suffer through policies to reduce the role of state pensions in favour of private. In state pensions, carers of children or other relatives receive credits towards the basic and second state pensions, but in private pension schemes there is no compensation for those providing unpaid care at the expense of their employment, earnings and pension entitlements.

Even where women are able to build a modest private pension, the low level of the basic state pension means that few women can escape the pensions poverty trap, in which the means tested Pension Credit effectively taxes any additional pensions at 40 per cent or more.

Dr Jay Ginn of the University of Surrey comments, ‘For women, who are the majority of the population, the debate about compulsion misses the point. Those whose careers combine employment with periods of unpaid family caring are disadvantaged in private pensions, whatever the level of compulsion. The injustice of female poverty and dependence in later life can only be tackled by substantially improving the level of state pensions.’