Revealed: A new generation of women face pension inequality

Posted on April 19, 2022 by davidhencke

Just before the Parliamentary recess the House of Commons library produced a new report on pension inequality showing how a new generation of women will lose out again to men unless action is taken now.

The report- The Pension Gender Gap – makes stark reading for millions of women now in work. The focus in this report is on the hurdles facing women to get an equal pension with men.

The main hurdle is the private pension or second pension women receive to top up their state pension. It quotes a Women’s Budget Group pre-Budget Briefing which says that: ‘Private pension schemes, promoted and subsidised by UK governments, are the main reason for the gender gap in pensions, placing women at a disadvantage due to their domestic roles and lower pay’.

The pay gap – still at 7.9 per cent – between men and women is basically discriminating against women getting the same pension as men. When the Conservative government set up the auto-enrollment scheme for a workplace pension in 2012- funded by employers and employee contributions – they excluded anyone not earning enough to pay national insurance.

While it increased the chances of women getting a private pension ( from 40 per cent in 2012 to 86 per cent in 2020) their savings fall away after they reach 35 because they are bringing up children and often take part time work.

As the report says: “The design of automatic enrolment widens the gap between lower and higher earners in retirement and disadvantages those in second jobs.”

Women who take part time work or multiple part time jobs are simply excluded from getting a second private pension partly paid by their employer.

Some low paid women may never get a work pension

And those who never earn enough at work – there are an estimated 500,000 of them nearly all women – never get a second pension at all.

As the Association of British Insurers told MPs on the Commons Work and Pension Committee: “Women disproportionately work in lower paid jobs; 75% of those earning under the £10,000 AE earning trigger are women. They also make up the majority of multiple job holders, as much as 64%. This is significant as their total income could be over the AE earnings trigger, but as it is divided across multiple jobs they will not be automatically enrolled into a pension.’

Fortunately it looks like the Department for Work and Pensions is planning to do something about this though we may have to wait a couple of years before this happens.

A DWP spokesperson said :

“Automatic enrolment has helped millions more women save into a pension, with participation among eligible women in the private sector rising from 40% in 2012 to 86% in 2020 – equal to that of men. Our plans to remove the Lower Earnings Limit for contributions and to reduce the eligible age of being automatically enrolled to 18 in the mid-2020s will enable even more women to save more and start saving earlier.”

But this isn’t the only barrier. The report highlights three other issues, affordable child care, pension rights for divorcees and monitoring pension equality.

On child care the report highlights demands by the trade union, Prospect and the People’s Pension, one of the larger pension trusts, both call for help with child care including tax relief for the care of the under two year olds and a local authority grant for 3 and 4 year olds.

Make pension savings a compulsory part of a divorce settlement

The Pension and Lifetime Savings Association call for the law to be changed so pension rights have to be considered in divorce proceedings.

“The government should consider changing the law to ensure that pensions rights are considered on a mandatory basis as part of divorce. Currently pensions may only be considered if there is a financial settlement considered by the courts. The process of pension sharing on divorce could also be better streamlined to remove friction and delay for all parties.”

And finally the Government Equalities Office should impose a mandatory requirement on the DWP to publish gender pension gap statistics and then draw up proposals to speed up ending the gap. The GEO did not want to comment on this.

There is one ray of hope arising from the new state pension introduced in 2016. It has narrowed the gap between men’s and women’s state pensions. Women got 82pc of men’s pension in 2016. By 2020 it had narrowed to 92pc. But the DWP could not tell me when it would be 100 per cent.

Unless action is taking speedily a whole new generation of women are going to lose out to men. No one wants to suffer the fate of 50swomen who have been so badly treated again. They are already worse off because of the abolition of the second pension in 2016.

Chris Thompson, a retired pension expect, pointed out both men and women lost out over auto-enrollment. “Between 2012 and prior to 6 April 2016 when the new state pension started people were also paying into the state second pension if they were not contracted out.

” From the 6 April 2016 people ceased accruing state second pension so are now much worse off than under the old state pension system. A low earner about £46 pw worse off and a high earner about £67 pw. Another thing to remember is that losses do not take into account loss of inherited and derived rights, loss of GMP indexation if contracted out or increase in NI due to loss of NI rebate.”

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Delays, miscalculations and unanswered calls: How the DWP is cheating first time pensioners

Posted on March 9, 2022 by davidhencke

Chaos inside the Department for Work and Pensions

As 1950s born women finally get their first pension at the age of 66 a new problem is emerging.

The chaos inside the DWP , which is coping both with new applications for pensions and having to pay back over 100,000 people who it cheated out of their pension in the past, has now spread to first time pensioners. As already revealed by this blog the DWP has secretly put through a ” drop and go” scheme and decided to prioritise simple cases – nearly always men – over complicated ones, such as widows entitled to past Serps payments to their husband’s pension and divorced women.

As a result the pension help line can’t cope, staff handling cases have not been properly briefed, and barely properly trained. People are starting to wait months beyond the due date when they get their pension. And when they get it the calculations can be wrong.

To illustrate this scandal one of my blog readers, Pauline Hinder, a 1950s born woman, who has kept meticulous records of her pension entitlement, and is a supporter of BackTo60, kept a diary of her trials and tribulations with the Department for Work and Pensions in trying to get her correct pension.

The story does have a happy ending but only because a former Liberal Democrat pensions minister, Sir Steve Webb, intervened on her behalf. Until then she was at a dead end.

DWP’s pension estimate was less than half Pauline was entitled

If that hadn’t happened she would have lost tens of thousands of pounds over the lifetime of her pension. They offered her a pension of just under £69 a week. Her real pension entitlement was £141.84 a week -more than DOUBLE the money they offered her.

Unlike many people she had records which could prove what they should pay her. But getting through to the DWP proved impossible.

As her diary reveals : “

“rang 08007310469 opt 2 then opt 4then opt 2

Spoke to Lee 10.20 He said I had to ring 08007317898 ‘new claim’ option – even though I’ve already made my claim!

Rang 08007317898 New claim opt 2 Then Hold for advisor

“Spoke to a polite man Anthony He was working from home ..but saw they’d received my letter of 6 pages of evidence to prove my entitlement was double their official pension quote yet couldn’t say when they’d received it. He said he’d flag it up to check but it would take 4 weeks…..I asked when 4 weeks started – he said today!

“I said no! Unacceptable – I’d phoned and written early in January and it was a 6 week response time then..

“I insisted a manager call me back I explained that the DWP had already underpaid a raft of earlier womens’ pensions and made amends/still making, without interest or compensation. Have they learned nothing – or are they committing corporate fraud as they are now repeating the same mistakes with a new generation of applicants.

” He was polite but batting me off with hogwash”

“He requested a callback within 24 hours for me. He was polite but batting me off with hogwash about no one to speak to, no supervisor blah blah. ..but he did put me on hold for a couple of minutes so I guess he was contacting someone from his home. “

As she says: “The DWP telephone line was useless….working from home, no managers, no access to screens telling them where matters were at. I sent all copies of my historical records supporting my correct position and their error in January and to date I have had no acknowledgement of that correspondence receipt but I know they’ve had it because I asked in one of the several pension helpline calls I made! The last helpline call I made I insisted a manager called.

” They called about an hour later but I think I was dog walking and missed the call. You can phone the number but it has a pre-recorded message saying they wanted to speak to me but they’ll call if they need to. They didn’t call again….”

Former pensions minister Sir Steve Webb intervention meant it was sorted in 24 hours

In desperation she turned to Sir Steve Webb, the former pensions minister in the coalition government.

He intervened by calling the DWP on her behalf.

Sir Steve went to a Pensions Customer Care Manager called David at the DWP. He was very helpful and genuinely empathetic.

Sir Steve was involved and job done in under 24 hours. Written apology in 48 hours and revised pension award in 72 hours.

An apology from the DWP showing the right pension

Sir Steve told me: “I’ve generally tried to help a small number of existing and new state pension recipients where they have got stuck on a complex issue or where there appears to be an unresolved underpayment.

“In Mrs Hinder’s case she had clearly understood the rules and spotted when a more recent state pension forecast (and award) was far below the correct amount. I passed her details on to DWP who quickly accepted that an error had been made.

“I do remain concerned that despite all the focus on historic state pension errors, errors are still being made on new claims. Whilst Mrs Hinder’s case relates to quite a narrow and specific issue (a special concession for women who paid the ‘reduced stamp’) a more common error I still come across is newly retired widows who are not getting the inherited SERPS they are due from a late husband on top of their own new state pension It’s a trickle rather than a flood, but, as we know, only a small percentage of a very big number is a lot of individual cases.”

My take on this is that Pauline Hinder showed amazing initiative and finally got her pension. But Sir Steve Webb cannot be expected to intervene in every case as he wouldn’t have time to do his day job. What we need is proper system with enough trained staff to do the job. It is quite clear we haven’t got one and ministers are to blame, They should sort it.