MOTHERS who take a career break to bring up their children have been robbed of their chance of a decent state pension after a government u-turn, campaigners have claimed.

The government quietly dropped plans to make it easier for women to top up their state-pension entitlement last week, provoking outrage among consumer groups and gasps of dismay from the House of Lords.

Michelle Mitchell at Age Concern said: “This is a slap in the face for thousands of women in or approaching retirement who are being penalised for taking time out of work to care. The government’s shameful u-turn will condemn many more women to poverty.”

Here we explain what is at stake and how it affects you.

What was going to change?

Earlier this year, peers passed an amendment to the Pensions Bill, which would have allowed women who take time off work to care for their children to pay extra National Insurance contributions (Nics) later in life to fill the gap.

At present, women need 39 to 44 qualifying years when they are working and paying Nics to get the full basic state pension of £87.30 a week, but the majority don’t meet this target.

The peers’ proposal would have allowed women to make one-off payments to cover up to nine years’ worth of missing contributions at any time up to retirement. The government indicated it would consider supporting this.

Under the present rules, if you have a broken contribution record you can pay voluntary, or Class 3 Nics, to make up for years you have missed. However, you can only pay extra for the gaps in your record going back to 1996. After 2009, you will be able to backdate for just the six previous years.

Baroness Hollis, who introduced the amendment, believes this is not flexible enough. Her proposal would have been particularly useful for women wanting to top up their pensions in their fifties when the children have flown the nest and there is more disposable income.

How many women would have been affected?

More than 8m. Out of the 12m women who have paid Nics, seven out of ten are not entitled to a full state pension as they took time off and so have not paid enough to qualify.

Why has the government dropped the proposal?

It does not think that it would help the poorest women most at risk of poverty in retirement.

Lord McKenzie, who spelt out the government’s position, said reforms that will make it easier for women to claim a full state pension are already in train.

What reforms?

The qualifying period will be cut to 30 years for both men and women from April 6, 2010.

Carers and women looking after children should find it easier to qualify for a full state pension under a reform of the home responsibilities protection system (HRP).Under this, you can claim HRP if you are caring for children under 16 or a sick or disabled person.

This cuts the number of qualifying years you need to build up a full state pension, but you still have to work for 20 years and pay Nics to get the full basic state pension. You get nothing if you don’t have a minimum 25% of the years needed to get a full state pension so must have at least five paid or credited years.

From April 2010, HRP will be replaced by a system of credits for parents and carers. The credits will be similar to Class 3 Nics, which means they will count towards your state pension entitlement. A person will be able to build up entitlement to a basic state pension on the carer’s credit alone.

The government claims that the reform of HRP and reduction of the number of qualifying years to 30 will mean that from 2010 three-quarters of women will qualify for a full state pension. By 2025, this is forecast to rise to 90%.

Will anyone lose out?

Men born after April 6, 1945, and women born after April 1950 who have paid extra Nics to make up for time they have been off work or abroad.

They will reach state retirement age after the proposals are introduced and if they have paid in more than the required 30 years they will have wasted thousands of pounds.

The government has offered to refund payments but many people will still be barred and will have to write off their losses. It has only offered to hand back voluntary Nics paid since May 25, 2006. The government has established this cut-off point because this was when it published proposals to reduce the number of qualifying years.

How much could I lose?

Insurer Standard Life calculates that a woman who makes extra contributions on the basis that she needs 39 years and then finds she only needs to have paid for 30 will have overpaid by £3,200.

Will I be refunded automatically?

No, so you should contact the national insurance office on 0845 915 5996 if you think you qualify.

How do I know whether I need to make up for lost time?

You can get a pension forecast from the pension service (pensionservice.gov.uk or call 0845 300 0168).

How much does it cost?

This year it is £7.80 a week or £405.60 a year to buy a year’s entitlement. The rate rises annually in line with inflation.

Times Recommends

• How to profit from your holiday
• Is there anywhere left to make money?
• 10 sites that could change your life