Women get a raw deal on pensions. Fewer of them work outside the home, and they often get paid less when they do take up paid employment. Many work only part-time.
All this means that the gender pay gap feeds into the pension issue. So when they get to retire they typically have a third less to live on than men.
A pensions gap of 38pc exists, according to the Irish Human Rights and Equality Commission.
But there are ways women can make the best of a bad situation by ensuring they maximise the value from the State pension, and any supplementary scheme, whether they are in the workforce or not.
Here are 10 things women need to know about pensions.
1 The State Pension
The State contributory pension is regarded as relatively generous. For those who have 48 annual PRSI contributions, the weekly payment is €238.30. This is the payment for people who qualified for pensions before September 2012. You get it from the age of 60. The means-tested State pension non-contributory is a payment for people aged over 66 who do not qualify for a State contributory pension or who qualify for only a reduced contributory pension based on their insurance record.
2 But women often get less than men
Women are losing large amounts of money from their retirement payments due to austerity cuts. A recent report from Age Action estimated that 23,000 females have been hit with lower payments due to changes to State pension eligibility rules in 2012.
Changes made by the previous government make it more difficult to qualify for a full pension. On average, retired workers have lost more than €1,500 a year, with women suffering the biggest hit, according to Age Action.
In 2012, the then-government changed the eligibility criteria for the contributory State pension. It moved to an “averaging rule” to calculate the number of contributions made by a worker.
Those entitled to a full pension were unaffected, but large numbers of those who would have been in line for smaller pensions lost out.
“Under the old system, if you had an average of 20 contributions a year, you would be entitled to €228.70. But after 2012, this dropped to €198.60, a cut of more than €30 each week,” Age Action’s Justin Moran said.
3 Homemaker scheme worth checking out
The homemaker scheme makes it easier for women who have spent time outside the workforce caring for children to qualify for the contributory State pension. The scheme protects your contributions by disregarding any years spent providing full-time care for a child under 12, or a disabled person over the age of 12.
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Up to 20 years can be disregarded when the yearly average number of contributions for a contributory pension is being calculated, which can help you qualify for State pension, or a higher rate of pension. Typically, you won’t have to apply for it. If you are already claiming child benefit, carer’s allowance or carer’s benefit, or a respite care grant, you will automatically be entitled to it.
4 Low pension coverage among women
Just a third of women own a pension, according to research. This means that two-thirds of women do not have a supplementary pension. This is despite the fact that women make up almost half of the workforce. Men are much more likely to have a pension. Part of the problem is that women are far less likely to discuss retirement planning with friends.
5 Most women don’t know how to start a pension
A worrying 71pc of women don’t know how to start a pension, according to a survey commissioned by Standard Life. There are two options in the private sector. If you are a PAYE employee your company may have an existing occupational pension scheme. Typically, the employer makes a contribution to this on behalf of the employee.
Large companies often contribute between 5pc and 9pc of annual salary to the pension. If you are earning €50,000 a year this works out at between €2,500 and €5,000 a year. Alternatively, the employer has to offer you access to a pension scheme even if it doesn’t contribute to it. That’s the legal requirement and has been for the past 15 years. Most women are unaware of this extremely important point, according to Aileen Power of Standard Life.
6 the Pension age has gone up
The State pension is now 66, up from 65 previously.
For those retiring from 2021 on it goes to 67.
For those retiring from 2028 the State pension will not be paid until 68.
However, many employers are still sending employees into retirement at the age of 65.
That is why the Citizens’ Assembly called recently for the abolition of the mandatory retirement age.
7 You may have to work until you are 70
People should not get the State pension until they reach the age of 70, a State-supported think tank has recommended. Moving the statutory retirement age to 70 would counteract a fall in the workforce and the rise in the number of pensioners, the Economic and Social Research Institute said recently.
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The chances are that this will be introduced. Currently, there are around six workers for every pensioner. Over the next 30 years this is due to fall to around two workers for every pensioner, adding to the costs of State pensions.
8 Maternity leave should not affect pension rights
If you get maternity benefit, you will get State pensions credits automatically. But this ends after 26 weeks. This means that if you take further unpaid leave, you will need to get your employer to complete the application form for maternity leave credits when you get back to work.
If you are taking parental leave, you should also be entitled to credits. But you have to apply for these.
9 You may get a spouse’s pension
If you are married but do not qualify for a pension, you may be entitled to what is called a “qualified adult” pension. This can be up to €213.50 for those over the age of 66. The payment is means-tested.
However, the concept of women being dependent on their husband in retirement is not appealing for women. If your husband has died and was a member of a defined-benefit pension scheme, you are likely to be entitled to a spouse’s pension, usually half the amount he got in retirement.
10 Pensions adjustment order
A court may make a pension adjustment order in the case of judicial separation, divorce and dissolution proceedings. This designates part of the pension to be paid to a spouse and dependent children.
The judge decides how much of the pension should be designated, according to the Courts Service.
The effect of such an order is that the designated part of the pension remains in the pension scheme but is payable to a spouse and children when the other spouse reaches pension age or dies.