Publication Explains Facts on Pensions

The Older Women’s League has published a special edition of its OWL Observer national tabloid devoted to helping women understand “pensionese.�

Poverty is a widespread problem for older women. According to the U.S. Census Bureau, in 1984 the median income for women over 65 is $6,000 a year, just $1,000 above the poverty line. For retired men the median income is $10,000. Among the widely believed myths about pensions are that most Americans receive them, that a woman who had been a homemaker will be taken care of by her husband’s retirement income and that those who do receive pensions get a significant amount.

In fact, OWL pointed out, only 30% of Americans over 65 receive pensions from a past employer. While the laws that regulate pensions have applied equally to both sexes, they have discriminated against women who are concentrated in lower-paying jobs and are more likely to change jobs or take time off from paid employment because of family needs. Because pensions tend to reward the longest term, highest paid workers, only half as many retired women as men receive pensions and those women receive only half as much as men, the organization said.

In 1984 only 11% of black women and 21% of white women received a pension based on their own employment or that of their spouse. The average pension income for a woman is $251 a month, half of what men receive.

Helping Midlife Women

The publication is part of the organization’s National Women’s Pension Literacy Campaign that is designed to help midlife women plan retirement and avoid unpleasant surprises when the time comes to receive a pension. One of the common unpleasant surprises is “pension integration.� Many women retire counting on a pension from a longtime employer and learn that their pension has been integrated (reduced by a percentage of their Social Security benefit). Since low wages lead to low pensions, integration is particularly detrimental to women.

OWL gave this example: “Mary Jones had earned a monthly pension benefit of $120 and a Social Security benefit of $300. She thought her monthly income would be $420. But her pension plan calculated her actual pension by subtracting one-third of her Social Security from the earned pension, leaving her with a pension of $20.�

The pension situation for women improved with the Retirement Equity Act of 1984, which dealt with some of the ways women had lost out on pensions. It changed the law so that a widow may receive a survivor benefit if her spouse had earned a pension but died before early retirement age. Before the new law, early death of the husband would eliminate his pension regardless of whether he had earned it.

Previously, a husband could choose to waive survivor benefits that would go to his widow if he died and receive larger payments only during his lifetime. The new law requires that both spouses must agree to this in writing. The new law requires that pension plans must honor awards of portions of pensions made by divorce courts.

The OWL publication explains existing and proposed legislation in the field, defines common pension terms, provides a guide for how a woman or a husband and wife can evaluate their future retirement income, suggests questions women should ask their employers about pension plans and lists organizations that provide advocacy and information in the field. Single copies are available free by writing Older Women’s League Pension Project, 1325 G St., NW, Washington, D.C. 20005.