MSE News: Guest Comment: Why women may lose out under the new state pension

Sarah Pennells, founder of SavvyWoman, explains why many women will be left with little or no time to plug their savings...
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Guest Comment: Why women may lose out under the new state pension

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  • dunstonh
    dunstonh Posts: 116,231 Forumite
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    I've had hundreds of comments and emails from women who have 30 years' National Insurance – enough to get the full state pension under the current rules – but who've stopped work often because they're caring for an elderly relative, have been made redundant, or can't find work. Now they'll have to see if they can buy extra National Insurance to get the full pension.

    It wasnt that many years ago that it was 40 years to qualify. So, whilst the move to 35 is worse than 30, it is better than 40 which it was for most of their life.
    Some women and men won't get the full flat rate state pension because they've been 'contracted out' of National Insurance. 'Contracting out' means that you paid a lower rate of National Insurance and you either got a rebate paid into your private pension, or you got a bit extra from your work pension when you retired.

    That is not correct. Contracted out with a rebate to the your personal pension did not result in lower NI being paid. That only happened with contracting out with occupational pensions.

    The idea of contracting out was to get a lower state pension but have the benefit in a personal or occupational pension instead. So, its not being lost. It is just being paid another way.
    This might sound like it's unfairly biased to women, but it's been a retirement lifeline to many thousands of women over the years.

    EU won't allow gender discrimination. Nor should any women. After all, you can't have it both ways. Equal treatment means taking the good with the bad. Not just selecting the things that benefit you.

    The move from 60 to 65 was correct and had a nice long warning period (its over 20 years ago now). The move from 65 to 66 was too quick and unfair for some. Gender equalisation has to happen. No choice on that. The move from 40 to 30 and now to 35 doesnt really make that much of a difference and its hard to complain when most of their working life it would have been 40 years. (plus finishing at 66/67/68 means they get 1-3 extra years anyway)
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • molerat
    molerat Posts: 31,798 Forumite
    Name Dropper Photogenic First Post First Anniversary
    I expected a better standard of journalism rather than this sensationalist half truth rubbish.

    A woman who has 30 years will get no less than she would have got under the old system, if she was not contracted out she will actually get more. If she has missing years between 2006 and 2016 then they can be bought at different rates to the current ones to top up to the full pension.

    Please cease this incessant whinging.
  • greenglide
    greenglide Posts: 3,301 Forumite
    First Anniversary Combo Breaker Hung up my suit!
    Except that anyone (male or female) who has less than 10 years contributions (either old rules or new rules) gets nothing unless they have a RRE (at any time) or overseas interest.
  • SnowMan
    SnowMan Posts: 3,356 Forumite
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    But although this affects both women and men, you're more likely to be contracted out if you work in the public sector – and around two thirds of those who work in the public sector are women
    Part of their public sector pensions will be made up of the additional state pension they contracted-out of. So they don't get any less it just comes from a different source.

    As many in this position will also have the chance to build back up their state pensions to the single tier amount through qualifying years after 2016, they will actually be better off, they could in some cases get the additional part of their state pension twice effectively.

    So overall those who contracted-out of the additional state pension will through the state pension changes either be roughly no worse off or in some cases better off than those who did not contract out of the additional state pension (in otherwise identical circumstances).

    And those who have been members of public sector schemes are of course lucky to have those valuable pensions. I don't begrudge any public sector worker their good pensions at all, but please none of this silly nonsense they are hard done by or discriminated against.

    Anyway correcting the factual errors Sarah Pennells is actually arguing that men are being discriminated against :rotfl:
    I came, I saw, I melted
  • JezR
    JezR Posts: 1,697 Forumite
    First Anniversary First Post
    I dislike the use of the word 'sneaky' in this article. There was nothing 'sneaky' in the changes referred to as such as they were openly presented at all stages, certainly from White Paper onwards. The only thing that could possibly come into that category is GMP indexing, and I am still not sure whether that arose from ignorance of one of the complexities of the operation of SERPS and the difficulty of transition rather than deliberate action.

    The article also includes a statement to the effect that a category B pension 'might sound like its unfairly biased to women'. It used to be but isn't any more as men are also entitled to a pension based on their partner's contributions. There has been modelling of the effect the removal of this will have and it adversely affects 2% of new pensioners by 2030, taking into account that two-fifths of people in this situation would still get topped up to the level of the Standard Minimum Guarantee. This is 130,000 women and 40,000 men.

    The 10 year minimum contribution requirement is a reversion to the pre-2010 situation. The main target here was people who lived in the UK for a short time, and indeed their spouses/partners.

    The ramped increase in women's pension age to 66 was at least in part a consequence of the rather slow paced timetable originally adopted to raise the age to 65 since it was not possible to prolong discrimination.
  • Al.
    Al. Posts: 322 Forumite
    An article written by someone who purports to embrace equality, who then requests preferential treatment. I wonder if the supporters of this campaign would have been equally measured in their response if discrimination legislation that sought to help and which had as much of a languid timeframe was as objectionable.

    Sorry, there was nothing underhand in this; instead, a campaign out of nothing seems to have got traction and critical mass as a result of folk who simply don't understand the issue, having loud voices. Dunston, good technical point re CO pensions. It's a shame that MSE doesn't expose its editorial to closer scrutiny. Can we expect a revision?
    Independent Financial Adviser.
  • Goldiegirl
    Goldiegirl Posts: 8,805 Forumite
    First Anniversary First Post Rampant Recycler Hung up my suit!
    I have to say I'm disappointed (although not surprised) to see this article on MSE.


    This sort of article does women a disservice, by portraying them as whiny victims. Surely, 'SavvyWoman' would be better off educating people (I say people, rather than just women, as there's men out there as well who are clueless about finances) about personal finances and teaching them to take responsibility for themselves, rather than playing the 'it's sooooo unfair card'.


    I'm in the generation of women who have been affected by the change in state retirement age. It was 60 when I started work - now it'll be 66 when I get my pension. But I'm not sitting here whinging about it. I've known changes were afoot for at least the last 20 years, and have made plans to deal with this situation. It's not as if this has happened all of a sudden and surely it's better that men and women are treated the same


    I was contracted out for many years of my working life. But, this generally was considered to be a positive thing. People who were contracted out were mostly in excellent workplace schemes, so they had no need to pay into SERPS for additional state pension. So, being contracted out was not a women losing out thing, it was a person in a good company pension scheme thing - i.e. an advantageous situation


    But times change, and we must change with them.


    I retired early at the end of last year. My only income is my pension from my previous employer. I've obtained a state pension forecast, which will be £126.75 a week.


    I've paid NI for more than 35 years, as I said previously I was contracted out for many of those years. As I'm not currently earning, I won't be able to make up NI contributions through an employer, to increase my state pension amount.


    Therefore, I'll be making voluntary NI contributions to increase my state pension, to bring it up to the single tier amount, by the time I get to state pension age.


    People (women) aren't losing out - they are getting what they have paid for - that is fair.


    I haven't paid enough to get the flat rate pension, so I'm doing something about it - that's what savvywoman should be encouraging her readers to do.
    Early retired - 18th December 2014
    If your dreams don't scare you, they're not big enough
  • Nual
    Nual Posts: 179 Forumite
    First Anniversary Combo Breaker
    Yes but...Its those of us born in the mid 50s who found out in our 40s that we wouldnt get a state pension until 65, and didnt think much of it because it was so far away. We have friends who got the SP at 60. I managed a woman who retired last year aged 64, having deferred her SP and getting winter fuel allowance plus bus pass and no NI to pay.

    The jump to 66 was a hard one for those of us already having to wait 5 years more than those a bit older. We are the generation that tried to have it all, many of us trying to hang on to careers while bring up children and there certainly wasn't much equality in my household when it came to sharing the domestics. My mother's generation stayed at home and maybe worked for a bit of pin money when the children were older.

    I also have friends who are struggling physically with their jobs, and unsure how much longer they can go on working because of health problems. Same for men, I know.

    So its not just suck it up, you want equality well here it is. Its complicated on a lot of levels and like all major changes there are those disproportionately affected. Women do earn less than men and do on average lose out if they have children.

    And in case you are wondering, I have 40+ years of NI contributions and a pot that means I can afford to stop at 60 if I choose to.
  • OldBeanz
    OldBeanz Posts: 1,400 Forumite
    First Anniversary First Post Name Dropper
    "didnt think much of it because it was so far away" Yes it was not very subtle of the Government. Complaining now about it appears churlish.
  • Malthusian
    Malthusian Posts: 10,920 Forumite
    First Anniversary First Post Name Dropper Photogenic
    Synonyms for savvy
    adj shrewd

    calculating, cunning, foxy, sharp, sly

    Yes, I am quoting selectively. But no more selectively than someone trying to make out that not being able to have one's contracted-out cake and also eat it is an injustice against women.
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