Low paid women lose out on state benefits

Many low-paid women are losing out on pensions, unemployment, health and sickness benefits because they do not understand the importance of paying National Insurance Contributions (NICs), according to research by the Equal Opportunities Commission (EOC).

A study of low-paid workers in the hotel and catering sector shows that part-time employees, most of whom are women, pay contributions intermittently because of the temporary nature of the work. These are effectively "lost contributions", as entitlement is based on qualifying years rather than an assessment of contributions made over a lifetime.

Older women are likely to lose out most because they only pay contributions intermittently, and because they often rely on their husband's contributions for their pension entitlement. And many younger women in the study believed it was not worthwhile paying contributions because they believed the state pension would no longer exist by the time they reached retirement.

EOC Chair Julie Mellor said "This survey of low paid workers in the hotel and catering industry is indicative of what is happening to low paid workers all over the country. They're robbing Peter to pay Paul, making a short-term gain because of the pressure on their household incomes, but losing out on their long-term security".

The EOC is urging the government to tell all low-paid workers that they will lose rights to benefits and pensions if they do not pay NICs. And in the longer term they are calling for further reforms to the NI system to give access to work-related benefits for low paid workers. Currently NI contributions must be paid when you earn over £66 a week. This will be raised to £84 per week from this year.