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Women will retire later but receive better state pensions

Released: 27 October 2011 Download PDF

Date:   27 October 2011
Coverage:  UK   
Theme:  Pensions


Women’s State Pension Age is rising, but more women will receive the full Basic State Pension in future and its purchasing power will strengthen.

Pension Trends Chapter 5, published today by the Office for National Statistics, reveals that in September 2010 only 48 per cent of female pensioners received a full Basic State Pension (BSP), compared with 87 per cent of male pensioners. Many women in the current generation of pensioners failed to build up full or near-full BSP entitlement under the system in place before 6 April 2010, mainly because of broken work histories and part-time work patterns.

However, as a result of legislative changes, 95 per cent of women reaching State Pension Age (SPA) in Great Britain in 2030/31 are expected to receive a full BSP.

The purchasing power of the BSP is also set to rise. This is because the Pensions Act 2007 re-linked BSP increases with earnings and in 2010 the Government introduced the ‘triple lock’ policy guaranteeing that BSP will be increased each year by average earnings growth, inflation or 2.5 per cent, whichever is higher. Modelling by the Department for Work and Pensions (DWP) suggests that by 2030 the purchasing power of BSP would increase by almost half.

Nevertheless, DWP modelling suggests that 60 per cent of women reaching SPA in 2016-20 will have state pension entitlements of less than £140 per week in 2011/12 earnings terms.

Today’s release also provides details of recent legislation on pensions (Pension Trends Chapter 1) and includes the 2010 report of the Occupational Pension Schemes Survey and the accompanying Statistical Bulletin.

The report of the Occupational Pension Schemes Survey (OPSS) 2010 reveals that active (employee) membership of occupational pension schemes continues to fall:
• The highest number of active members was recorded in 1967, when there were 12.2 million. In 2010 there were 8.3 million active members, the lowest level since the 1950s.
• Since 2004, public sector active membership has overtaken private sector active membership as numbers in the private sector have fallen sharply. In 2010, almost two-thirds of active members were in the public sector.
Average contribution rates in the private sector in 2010 were lower in defined contribution (DC) schemes than in defined benefit (DB) schemes:
• The average employee in a DB scheme contributed 5.1 per cent of salary (excluding bonuses) to their pension, compared with 2.7 per cent in DC schemes.
• Average employer contribution rates were 15.8 per cent in DB schemes and 6.2 per cent in DC schemes.

Background notes

  1. This release covers Pension Trends Chapter 5: State pensions and available at and Pension Trends Chapter 1: Pensions legislation – an overview available at
  2. This release also covers the Occupational Pension Schemes Survey 2010 annual report  available at and the Statistical Bulletin, available at

  3. The state pension is currently made up of two tiers: the Basic State Pension (BSP), which provides a flat-rate pension in retirement, and the additional state pension, under which employees (but not the self-employed) may add to the BSP by making extra contributions related to earnings in order to receive additional pension payments.
  4. A Green Paper published by the Department for Work and Pensions (DWP) in April 2011 included a proposal to replace the two tier system with a single tier, flat-rate state pension set just above the standard guarantee credit level for Pension Credit, at £140 per week.

  5. The Pensions Act 1995 contained measures for equalisation of State Pension Age (SPA) between the sexes between 2010 and 2020 by increasing women’s SPA from 60 to 65. The Pensions Act 2007 provided for gradual increases in SPA for men and women from 65 to 68 between 2024 and 2046. The Pensions Bill 2011, which passed its third reading in the House of Commons on 18 October 2011, proposes to speed up the pace of the increases contained in the 1995 and 2007 Acts: women’s SPA would rise to 65 by November 2018 and SPA for men and women would reach 66 by October 2020 (amended from April 2020). The DWP modelling quoted in this news release takes into account all of these legislative changes except the amendment delaying the increase in SPA to 66 by six months.
  6. The Pensions Act 2007 contains changes to the rules on building up entitlements to BSP, including a reduction in the number of years needed to qualify for full BSP to 30 years from 6 April 2010 (from 44 for men and 39 for women); it also contains the legislation on restoring the link between BSP and earnings. The ‘triple lock’ policy, announced in the June 2010 Budget, guarantees that BSP will be increased each year by average earnings growth, inflation or 2.5 per cent, whichever is higher.
  7. The measure of inflation referred to in this release is the Consumer Prices Index (CPI).
  8. Figures for state pension entitlements are produced by DWP’s Pensim2 model. They comprise Basic State Pension and additional state pension (gross). Gross amounts are estimates of the total entitlement to additional state pension, including amounts paid by private pension schemes which are contracted out of the additional state pension.
  9. Occupational pension schemes are a form of workplace pension, where the employer is the pension provider (unlike group personal pensions, including stakeholder pensions, which are organised through the employer but provided by insurance companies).
  10. Active members of occupational pension schemes are current employees who contribute (or have contributions made on their behalf) to the pension scheme.
  11. Defined benefit (DB) occupational pension schemes are those in which the rules specify the rate of benefits to be paid. The most common DB schemes are ‘final salary’, but ‘career average’ schemes, which use average earnings over the whole career as the basis for calculating benefits, are becoming more common.

  12. A defined contribution (DC) scheme is one in which the benefits are determined by the contributions paid into the scheme, the investment return on those contributions, and the type of annuity purchased (if any). They are also known as money purchase schemes.
  13. Details of the policy governing the release of new data are available from the media office.

  14. National Statistics are produced to high professional standards set out in the Code of Practice for Official Statistics. They undergo regular quality assurance reviews to ensure that they meet customer needs. They are produced free from any political interference.
    © Crown copyright 2011.

  15. Issued by: Office for National Statistics, Government Buildings, Cardiff Road, Newport NP10 8XG

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