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New pensions plans could exclude women says TUC

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Faye Mooney
WVoN co-editor

The new UK government ‘auto-enrolment’ pension scheme  could exclude nearly two million women, according to the Trades Union Congress (TUC).

The scheme, which starts in October this year, will require employers to automatically enrol all eligible employees onto a workplace pension, unless the employee decides to opt out.

The TUC has urged the government to freeze the current trigger threshold at £7,500. The government has been consulting on whether to raise it to £10,000,  in line with the increase in the personal income tax allowance.

The TUC argue that this move could lead to the exclusion of 1.8 million women from the auto-enrolment scheme.

Their figures suggest that the one in seven women who currently earn more than £7,500 a year but less than £10,000 would no longer be eligible for auto-enrolment, thus  finding themselves ‘locked out’ of the pension scheme.

TUC general secretary Brendan Barber said that raising the earnings trigger  “would be disastrous if it had the unintended consequence of excluding a significant proportion of women workers from pensions saving.”

Although about 500,000 male workers would also be affected, women are at greatest risk as they are most likely to be amongst the lowest earners.

Ros Altmann, director general of Saga, told the BBC that many women already lose out when it comes to pensions, as time taken off work to raise a family can hinder career development and reduce the amount women can afford to put away for their retirement.

In addition, the next five years will see the biggest ever changes to women’s pensions, with the state retirement age increasing from 60 to 66, and a reduction in benefits due to government cuts.

Some believe that these changes will disadvantage women.

Altmann said “The proposals are completely unfair. People need ten years’ notice of a one-year rise in their pension age if they are going to have time to adjust. These women are getting six or seven years’ notice of a two-year change.”

 

  1. Can someone explain to me why people need so long to adjust to a change in working length? I’ve seen it posted on so many sites yet none seem to justify it, working salary is generally higher than your pension so surely working longer allows you to retire better?

  2. Faye Mooney says:

    http://www.guardian.co.uk/money/2011/jan/13/retirement-age-change-mortgage-rethink

    This guardian article from last year sheds a little bit of light.

    • The article suggests raising the retirement age would be a good thing because people could get mortgages and similar extended past 65 where as today the lenders have no real plan for that contingency… So this would be a good change upping the retirement age lots especially for women who have the issue at 60 not 65 as it stands.

  3. Faye Mooney says:

    I think that the article highlights the fact that increasing the retirement age means that people have to plan their long-term finances in a different way, hence the need for an adjustment period: for many people it often isn’t as straightforward has simply having more money. There are also strong personal social implications to working for much longer (such as familial care) – something that is often particularly important to women.

    • The familial connection may be true however how many people plan child care 10 years in advance? Assuming people are health (because all plans go out the window when people aren’t and you can’t really plan that) then working longer gives people more options. As te article says an assumption might be a drop to part-time after the DRA however that can generally be quite flexible. Children will tend to be grown up by age 60+ for the majority of the population so direct child care wouldn’t be an issue, indirect such as of grand kids might be however again how many people plan that 10 years out in a way that requires ten years (per year of change!) notice.

      Even if there is a negative effect we should really push forward with it in terms of equality anyway. Creating artificial differences in law between men and women when our laws are suppose to be gender neutral is not a good thing.

  4. Faye Mooney says:

    http://www.saga.co.uk/money/pensions-and-savings/ros-altmann-discusses-proposed-changes-to-womens-pension-age.aspx

    This podcast featuring an interview with Ros Altmann on this very issue is illuminating – and she explains the individual plight of women who have made irreversible plans for their retirement, and emphasises the need for long-term notice in order to safeguard *all* women from poverty in old age – 10 years actually seems reasonable when this is considered.

    In terms of your point on equality – I think there does need to be consideration of the differing needs of men and women in law. I’m not sure law is supposed to be gender neutral as much as fair and non-discriminatory?

  5. Listening to the podcast it makes some sense – the people affected are largely those who are not working and relying on savings to tide them over until retirement not those who aren’t working – however the pension deal isn’t generally a contract set at the time you start paying into it but rather one that resolves when you claim it. A lot of those plans aren’t irreversible though and those same people could pick-up part time work or similar to actually tide them over rather than just relying on savings. I sympathise but it seems like there are easily workable solutions to these problems.

    On law and equality I think the law really does need to be written in a gender neutral fashion otherwise it starts to become more complex and worrying. In some areas we could likely gloss over imbalances in favour of one gender or another but do we really expect to make things like justifications for murder different? Should we allow women to claim a slow build up of anger that resulted in the death of a man but only allow men a fast release of anger that results in the death of a woman rather than realising that people react in different ways but our laws should expect people to behave to a reasonable standard that isn’t gender bound. We are told there is no difference between men and women’s cognitive ability in adulthood so why should there be a difference in the law.

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