11 August 2006
The DWP has announced its proposals to improve pension saving,
but warned that a change in attitudes to saving is also
required.
Women face a bleak future because not enough of them are saving
for their retirement, according to James Purnell, Minister for
Pension Reform. The gender gap is such that only 30 per cent of
women retire on a full state pension, compared with 85 per cent of
men.
The DWP yesterday revealed plans to improve the way the pensions
system deals with provision for the low-paid. This group includes a
high proportion of women, offering a way to compensate for
situations in which women stop working in order to have children
and, in turn, stop contributing to their pension. James Purnell
remarked:
"Half of all women stop saving for retirement when they have
children. Our reforms recognise this caring role with a new
contributory principle - making the state pension system fairer for
women and carers who take time away from employment to raise
children or look after others."
At the centre of the government's plan is a proposal to
automatically enrol up to 10 million low-paid employees into a
system of personal pension accounts. These will be portable,
subject to minimal administration and costs, and in receipt of
contributions from employers, employees and the government.
However, Purnell and Meg Munn, Minister for Women, have pointed
out that government reform can only be the start and that there
needs to be a change in attitudes to pension saving on the part of
women themselves. Munn said:
"Women need to think about how they can save privately
throughout their lives, in order to close the gender gap and avoid
a big drop in income when they retire. The earlier they start
saving, the more money they will have to retire on - it's important
that women realise that it's never too late to start making
additional provision for retirement."
The government's proposals can be seen at www.dwp.gov.uk/pensionsreform. To respond to
the proposals in the White Paper, Security in retirement: towards a
new pensions system, go to www.dwp.gov.uk/pensionsreform/forum.
