Sexual equality? In pensions, it hasn't happened

How can you save when you have to take time off? The system is punishing millions of women

Amid the voices of dissent that greet the Government's plans for pension reform, due to be announced this week, will be ones with a particular tone - female.

Despite an encouraging leak late last week that the White Paper proposals will include a cut in the number of years required (from 39 to 30) for women to qualify for a full state pension, the document is unlikely to feature a reform recommended by Lord Turner in his report on Britain's long-term savings crisis: the introduction of a universal basic pension.

This policy - based on residency and not on contributions - would do away with the need to rely on years of working for entitlement. At a stroke, it could benefit hundreds of thousands of women struggling to secure funds for their retirement because they haven't been able to build up enough contributions due to lower pay and time off for children.

Although the female-friendly plan had secured support from the National Pensioners Convention as well as Lord Turner, its cost and complexity is likely to rule it out, warns Tom McPhail of independent financial adviser (IFA) Hargreaves Lansdown.

"A universal pension would be the single best thing that the Government could do for women's pensions, but it is unlikely to happen any time soon."

The White Paper will, however, offer some details of how a separate national pension savings scheme (NPSS) might work. This other major Turner suggestion would mean that all employees who are not already members of a pension plan would be automatically enrolled into a scheme - with an opt-out if desired - and pay 4 per cent of their salary in return for a 3 per cent contribution from their company and 1 per cent from the government.

While that might encourage more women to put money by for their retirement, it will only work for those who are in a position to do so.

"The NPSS will not be enough on its own," says a spokesman for the Fawcett Society, which campaigns on women's issues. "Many women simply earn nothing at all, or too little to save."

That women are much poorer than men in retirement is due to a miserable mix of factors.

First, the basic state system in effect punishes women for taking time off work to have children by limiting the amount of national insurance contributions they can build up.

Second, even when they are in a full-time job, they tend to earn less than men, so their private pension payments are smaller.

Third, when they return to work after having children, it might well be on a part-time basis, so they have less chance of being offered membership of a company scheme.

And fourth, because they are often dependent on their partners and tend to spend what they earn on their children, they don't make their own retirement provisions.

Churn these ingredients into hard figures and they make a bitter dish. Fewer than one in five women qualify for the full basic state pension, which is currently £84.25 a week, whereas 98 per cent of men are eligible, according to government statistics.

To qualify for the full pension, women need to work for 39 years (men, 44 years). Due to career breaks, it's no surprise that many fall short.

Worse, if a woman retires with less than a quarter of the qualifying years, she won't receive anything at all under what is known as the "25 per cent rule".

Today's figures suggest two million women have failed to build up any basic state pension entitlement. Single female pensioners are the poorest of all, with one in five living in poverty, reports the Department for Work and Pensions.

For private provision, the figures are no less forbidding. Only 35 per cent of women have a pension fund, according to Investec Private Bank, mainly because they say they don't have any money to spare each month.

Indeed, for every pound of retirement income received by men in a pensioner couple, women get less than 32p, says the Women and Equality Unit.

Everyone, including the Government, agrees there is a problem and the Conservatives have even created the post of spokesman for women's pensions. However, for all the campaigning of the past few years, little movement has been made towards a solution. That, say some in the financial services industry, points to women having to do more to help themselves.

"They retire earlier and live longer than men, but are simply not making enough provision for their futures through sound retirement planning," says Mark Summerfield, the director of savings at Co-operative Financial Services.

Julie Minette, 29, is concerned about her failure to start saving into a pension. Although her employer does offer a stakeholder scheme, she has yet to join.

"I like the idea of the NPSS. I wish they would change it so that it's up to me to opt out of a pension scheme," she says. "A pension seems such a long time away, and looks set to be even later with the retirement age being raised by the Government."

Julie is studying part-time for an economics degree and says she sees that as her "investment for the future".

So what should women be doing to improve their retirement prospects?

Full-time work is not a prerequisite for a pension fund. Even those who earn nothing at all, but rely on a partner for income, can put up to £2,808 a year into a stakeholder plan. Women should ask their partners to make the contributions on their behalf if they are unable to do so.

Meanwhile, home responsibilities protection (HRP), a government programme, can improve state pension benefits. You can claim for each year in which you are off work caring for a child, though these must be full tax years - so it's no help to those who are off for nine or 10 months.