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Women second-class citizens in pensions for years says adviser

WOMEN have been the “second-class citizens” in both state and private pensions for many years, a former Downing Street adviser has warned.

Ros Altmann, an independent pensions expert and former Downing Street adviser, said the problem was particularly acute for women already in their late 50s or older.

Her concerns bear out figures obtained by the Yorkshire Post that show many women over 60 in the region are struggling with debt.

Figures from the debt charity StepChange show that in 2013 on average women who were aged over 60 and contacting them for advice in the region, owed £13,765 on credit cards, loans and other unsecured debts, putting pressure on them at a time in life when they are retired or contemplating retirement.

Dr Altmann said: “For years, women have been second-class citizens in both state and private pensions. This particularly affects those in their late 50s or older.

“Women have shorter working careers than men, so they have fewer years during which they can save for a pension or contribute to National Insurance and women also earn less than men when they are working, once again leaving them with less chance to save for a pension and leaving them with lower state pensions as they lose out on the earnings-related element of the system.”

The warnings come just days after a leading think tank called for people to be forced to put money into a pension in the same way they have to pay taxes.

Policy Exchange said a “help to save” scheme should be set up, which would remove people’s ability to opt out of the workplace pension scheme they are placed in under the Government’s landmark automatic enrolment into pensions, which came into effect last year.

Until now, a lower-than-expected rate of one in 10 employees is opting out, but Policy Exchange said this level may increase as smaller firms are brought into the scheme.

The proposed “help to save” initiative would also see savers’ contributions increase over time as their incomes rise.

However Dr Altmann said: “In the current environment I’m am not sure whether compelling people to save in a pension is the best thing that we can do.”

Although she said compelling people to have alternative savings that could help with expenses through life such as student loans, housing costs and which could also help out later in life might be a better idea.

Dr Altmann urged the Department for Work and Pensions to write to all women with details of their state pensions and how to buy extra contributions.

Sarah Pennells, money expert and founder of SavvyWoman.co.uk said state pensions were a “massive issue”, adding: “I get more emails and comments about state pensions than anything else. Women don’t tend to work the same length of years as men and can often earn less and she said many people don’t start to think about pensions until later in life.

“Fewer than half the women who currently retire get the full basic pension,” she said. While they are also often more reliant on it than men, she added.

A recent survey by Age UK painted a profoundly worrying picture of the financial resilience of tomorrow’s pensioners with just under a quarter of people aged 50 – 64 believing there was no 
point in trying to save for retirement.

The survey found that, far from being complacent about their financial predicament, many people did not believe that they had enough to retire comfortably. For women aged over 50 the picture is particularly bleak with 30 per cent disillusioned about saving.

 

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