State Pension  

Govt urged to introduce state pension top-up for mothers

Govt urged to introduce state pension top-up for mothers

The government has been urged to introduce an additional rate of pension, on top of the single-tier state pension, for unemployed people looking after a child under 12.

Workers union Prospect called for this measure among five other solutions proposed in its 13-page report Tackling the gender pay gap, published today (1 November).

The current state pension system allows people looking after a child under the age of 12 and not working to receive credits to ensure there is no gap in their National Insurance record, and that those years count towards state pension entitlement.

However, according to Prospect, this is a form of negative protection, as it simply ensures that people with childcare responsibilities can build up as much in state pension as others.

Instead, the union said, there was a case for positive recognition of such responsibilities to "help offset the impact childcare responsibilities have on occupational pension entitlement".

Prospect noted there was already a precedent for an additional rate of pension to be given to these individuals.

Under the state second pension - formerly the state earnings related pension scheme - people with childcare responsibilities were given credits that built up additional pension on top of the basic state pension, at a rate equivalent to someone working at the lower earnings threshold of about £16,000 a year in today’s prices.

The union is also advocating that there should be a statutory requirement for the Department for Work and Pensions (DWP) to report annually on the gender pension gap.

In Prospect's estimation the gender pension gap was about 39.5 per cent in 2016/17 based on an analysis of the Family Resources Survey (FRS).

 

2014/15

2015/16

2016/17

Gender pension pay gap

41.6%

40.7%

39.5%

The union defined the gender pension gap as the percentage difference in average gross pension income for women receiving the state pension when compared with men.

However, Prospect said its estimate was not an adequate alternative to a detailed analysis by government.

Parliament should receive an annual report from DWP on the size of the gender pension gap and its main causes, which would "illustrate the scale of the problem and help build a consensus for action," it noted.

"There will be no significant progress until this issue receives the attention it deserves," it added.

Prospect’s analysis showed that the gender pension gap arose largely because of structural features of the labour market, the pension system and the unequal distribution of caring and other family related responsibilities.

"These issues must be addressed so that women can have an equal chance of a comfortable retirement," it said.

Prospect is also calling on MPs to establish a new pension commission, which should consider the level of income required for a decent standard of living in retirement, and make recommendations about the minimum level of contributions required for low and median earners to achieve this.

This would operate on a non-partisan basis like the Low Pay Commission, it said.