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Women and Pensions
by Minister for Pension Reform James Purnell

More and more women are working and enjoying the independence it brings - this has been a hugely positive change in our society over recent decades. Yet, according to the findings of the Pensions Commission, there are as many as 12 million people not putting enough money aside for their retirement.

Among women, only 10 per cent are contributing toward a personal or Stakeholder pension, compared with 18 per cent of men. And only 30 per cent of women retiring today have entitlement to a full basic State Pension. It's clearly indefensible that the figure for men stands at 85 per cent.

The Government is taking steps to deal with this issue, in particular through measures set out in our recent Pensions White Paper.

We want to modernise the contributory system to better reflect the different ways in which people contribute to society and ensure carers, many of them women, have improved opportunities to build up an adequate State Pension.

So we will lower the number of qualifying years required for full entitlement to just 30 years for all those reaching pension age from 2010, from 44 for men and 39 for women.

These changes will see around 70 percent of women reaching state pension age entitled to a full basic State Pension in 2010,0 percent in 2020 and more than 90 percent from 2025, compared with only 30 per cent now.

This will be a massive achievement, but at the same time we should not get carried away.

From 2050, someone who has been working and caring from age 25 to state pension age could receive around £135 per week in state pensions at retirement or around £19 a day. Additional years of working and caring could top this up further by around £1.40 a week.
Is that really enough for us to enjoy the things we enjoy now, in our working lives? Probably not.

That's because the State Pension is not meant to be the answer to all of our retirement hopes and dreams.

Nor is it meant to be a substitute for personal saving.

State provision is there to provide a solid foundation for our retirement and to give us an incentive to build on that foundation. Every individual has a responsibility to provide for themselves in later life.

To help you do that, we will make the world of private pensions simpler and easier to understand.

Your job is simply to decide what kind of retirement you want to secure and how much you want to save.

This will be affected by lifestyle expectations, but it might be worth looking at a few figures.

If, in your early 20s, you started to save just over £10 a week in a personal account - a contribution which would then be doubled by your employer and the state - by age 65 you could have a pension fund of around £65,000.

A woman retiring at 65 today with a nest egg of £65,000 could buy an indexed annuity, a yearly payment that is linked to inflation, of £2,800.

What that means is actually very simple: based on today's annuity rates, a woman putting aside around £10 a week during her working life could receive a guaranteed weekly payment of around £54 in retirement.

And £10 a week is just an example. There's nothing to stop you saving more and getting even greater rewards.

Whatever you decide, the important thing is to be clear about what you want from retirement and to take simple steps that make sure you achieve it.

Just visiting a website such as www.pensioncalculator.org.uk will point you in the right direction.

Women are playing an increasingly important role in the workplace and contributing massively to the economy.

Our reforms will ensure, quite rightly, that State Pension entitlement for women will greatly improve.

The final part of the equation is for you to think about how much you need to save and to start saving sooner rather than later.

That way you can be sure that the rewards you appreciate now will still be there in retirement, when you will have more time than ever to enjoy them to the full.

For more information on pensions log on to www.thepensionservice.gov.uk