(London: Catalyst, December 2001) (Catalyst is at P.O. Box 27477, London SW9 8WT, telephone 020 7733 2111, email catalyst@catalyst-trust.co.uk, website www.catalyst-trust.co.uk).
The introduction to this paper reveals just how small women’s financial resources are in retirement compared with men’s. (The statistical evidence reveals a divide far larger than this reviewer realised). This gulf, which relates particularly to occupational and private pension provisions, means that women are more reliant on a state pension than men are.
The paper also reveals significant continuities in government policy on pensions, with the change in government in 1997 seeming to make little difference to the consensus that private provision (with public subsidy) should grow and that the state Basic Pension should decline in real terms. Both of these trends disadvantage women.
Another serious trend is towards means-testing. Because of the advent of the Minimum Income Guarantee, by 2003 half of all pensioners will suffer means-testing; and, combined with the fact that Britain has a lower state pension than most other OECD countries, this is bound to affect the willingness of people on low incomes to save for their old age.
Ginn suggests that it needn’t be like this:
“There are better alternatives, even in liberal welfare states. For example, New Zealand provides a tax-funded citizen’s pension at age 65 to each resident, irrespective of employment record. The amount is 34 per cent of average net earnings for each married person and 44 per cent for lone pensioners. In 1998 this was equivalent to over £100 per week for a lone pensioner (using Purchasing Power Parities). As a result, New Zealand’s men’s and women’s incomes in retirement are roughly equal. One reason New Zealand has the resources to provide a citizen’s pension for all is that there is no tax relief on private pensions. Denmark also provides a citizen’s pension higher than Britain’s Basic Pension, although only at age 67.
“Closer to home, Ireland has a higher basic pension than Britain. In 1998 it was equivalent to £91 per week (29 per cent of average industrial earnings) and it is being increased faster than prices.
“Scrapping the NI system and replacing it with a citizen’s pension set at an adequate level would avoid the increasingly complex calculations of entitlements in the NI pension schemes. For women, it would have the added advantage of rewarding unpaid and paid work over the life course equally, allowing older women the dignity of an income of their own and improving gender equality in retirement incomes,” (p.15).
Ginn also offers some less radical suggestions, such as raising the Basic Pension to Minimum Income Guarantee level; but the argument of the paper leads inexorably towards the conclusion that a citizen’s pension is the best way to provide an income for elderly people in such a way that the inequalities between men and women before retirement might not be perpetuated after it.