Dozens of low-paid women workers at a leading public school are celebrating after gaining equal pension rights following a 10-year legal battle.

The victory against the two Haberdashers' schools for boys and girls in Monmouth, south Wales, will see more than £150,000 paid out to the part-time workers, who were denied access to the school's pension scheme.

However, full-time male staff, working in similar roles, were allowed to join on a voluntary basis.

In a pay claim taken to employment tribunals in 1998, the women claimed that the school was discriminating against them because of their sex and was in breach of equal pay and sex discrimination legislation.

Their union, Unison, successfully argued that pensions are deferred pay, with the non-contributory scheme, based on final salary, being worth about £1,300 a year for eight years for each worker, plus a lump sum.

The 27 claimants, many of whom are now retired, will receive between £1,500 and £17,000 each after the claim was settled just days before a tribunal hearing.

Between them, the workers carried out a variety of roles such as house parents, administrators, assistant matrons, cooks and cleaners. Their claims covered the period when the pension scheme was changed, between 1976 and 1999.

But retired cleaner Kay Bamford died before a settlement was reached after working at one of the schools for more than 10 years. Tess Taylor, 70, from Monmouth, worked as an assistant matron for 27 years before retiring in 1999. She said: "I think this is a large victory for small people. This must be a landmark case and we are glad to have won after all these years. But I find it crazy that a satisfactory offer from the school was only made days before the tribunal took place.

"With more goodwill and co-operation from Monmouth school this could have been sorted way before now and there would be less ill feeling."

Dominic MacAskill, a Unison organiser who has worked on the claim for the last six years, said: "I have been deeply impressed by the dignity and determination that these low-paid women workers have shown in their campaign for justice. They have demonstrated that workers standing united in their union can take on, and win against, the most powerful establishment in their community."

Dave Prentis, general secretary of Unison, said: "I am pleased that we have got justice for our members at last.

"But it has taken over a decade, which shows how desperately we need a speeded up system to deal with equal pay claims.

"The school dragged out the case and probably spent more in legal costs than it did to settle the dispute with their loyal workers. It is also very sad that one of the retired women died before she could benefit from the win."

Workers over 50 in white collar, management roles have the most valuable pensions, paying two-thirds of their final salary

A pensions aristocracy has emerged in the last decade that is grabbing the lion's share of money set aside for retirement by UK workers, according to a growing number of pension experts. The baby-boomer generation, most of them over 50 years old and in white collar, management roles, have not only seen their incomes soar and their wealth expand in the last 15 years, mainly on the back of a rising property market, but have also grabbed the most valuable pensions.

Some of Britain's biggest companies are crippled by the costs of maintaining pension promises to this vociferous group of wealthy directors and better paid, mainly unionised workers.

The decision by BP this week to shut its final salary scheme to new members and Barclays' closure of its scheme to all staff shows not only that the promise of generous private sector pensions is rapidly dying, but also that a generation has effectively pulled up the ladder to protect its own pension arrangements.

£1tn deficit

The private sector pension deficit is heading towards £1tn. While official figures put the funding deficit at about £200bn for the 7,200 largest final salary schemes, one recent calculation using more conservative valuations puts the collective private sector funding deficit at more than £600bn.

According to Marcus Hurd of Aon Consulting, pensions have leapt up the agenda of every major company.

"Every company will at sometime this year consider closing their schemes altogether. The cost of providing final salary pensions has soared at a time when companies need to cut costs. And when pension schemes are doing badly is seen as the best time to tell staff that cuts are necessary, so Barclays is likely to be the first of many."

A final salary pension typically pays two-thirds of a worker's last pay cheque after 40 years service. Employers will put aside 20% to 25% of workers' salary to pay for the commitment with top-up payments to cut scheme deficits often worth another 10% of salary.

Younger workers, meanwhile, have missed the boat. They will receive contributions nearer an average of 7-8% of salary for money purchase arrangements. Pension payouts can vary wildly, but are likely to be between 20% to 30% of salary for 30 to 40 years' service.

Board directors are usually cagey about the reasons for the drastic cuts in contribution rates other than to say it is part of a general cost cutting programme. But privately they will state that younger workers are paying the cost of maintaining final salary pensions to the dwindling band of older workers in final salary schemes.

BT is a case in point. A £2.4bn shortfall in the last accounts is expected to balloon to nearer £8bn when a more sophisticated review is published later this year.

Legislation passed over the last 14 years will force BT to maintain retirement promises to its workers which means that those outside its final salary scheme will suffer. BT puts 10 times as much cash into its final salary scheme as the cheaper version for new workers.

It has 110,000 workers of whom 69,000 are in the final salary scheme. In 2003 it was closed to new entrants and the company opened a money purchase scheme that pays a pension pegged to the performance of the stock market.

Figures from BT show it pays £380m a year to support existing workers in the final salary scheme and £350m to maintain the promises to 97,000 former employees and 178,000 BT pensioners.

Closing the £8bn gap in BT's pension funding will be top of the agenda for the pensions regulator. The company could be forced to pay an extra £750m a year to close the gap.

In the public sector, a pension deficit of £1tn has emerged in recent years largely driven by the costs of providing a retirement income to millions of health, education and council workers. As in the private sector, the biggest winners are the thousands of middle managers who walk away with the lion's share of the pensions cake.

MPs have also made sure that along with company directors, they enjoy the most generous pensions. In 2003, at the point when private sector pensions went into freefall, MPs voted to copy company directors and accelerate their pension benefits, meaning they gained their full entitlement to two thirds of their salary after 20 years of service rather than 40.

Its a mechanism that allowed Royal Bank of Scotland's Sir Fred Goodwin to collect his £700,000 annual pension after less than 20 years at the bank.

Almost half the police service budget in some districts is paid straight into the pensions of retired staff.

Council ­budgets are also paying the price as the bill soars for providing ­guaranteed retirement packages. In some years a quarter of council tax rises can be accounted for by the increased cost of providing pensions.

Valuable asset

Steve Bee, head of pensions research at insurer Royal London, calls final ­salary pensions the most valuable asset any worker will receive from their employer. A stint in the public sector, where the government guarantees a fixed amount of pension for each year's service, is one he recommends to friends and family. "Five years as a teacher or local ­government worker is worth its weight in gold," he said.

There are an estimated 2 million ­private sector workers and 5 million public sector workers still paying into final salary schemes. Another 12 ­million workers, who have built up final salary ­pension rights, also expect to have their ­commitments honoured.

Pensions consultant John Ralfe has long campaigned for a more realistic analysis of the winners and losers in retirement. He argues that recent increases in life expectancy and declines in investment returns have sent the cost of providing guaranteed retirement schemes sky-rocketing. He argues that companies, ministers, union leaders and the public sector have yet to wake up to the costs.

Like other pensions experts, including the former Downing Street adviser Ros Altmann and the former Treasury adviser Alan ­Pickering, he believes these baby boomers must ­relinquish some of the promises made to them or the younger ^­generation, and those people locked out of final salary pensions, will be forced to work well into their old age and live in dire poverty.

• Cost of providing pensions for 18,000 staff forces closure
• Chief executive John Varley expected to set up his own retirement plan

Britain's pensions crisis deepened after Barclays notified staff that it planned to shut its final-salary pension scheme to existing staff in a move that will shift more than 18,000 workers into a cheaper retirement plan.

The bank said the rising costs of providing guaranteed pensions had forced the board to review the retirement benefits it offered. Unions warned that staff were furious at the move and accused the bank of betraying loyal workers who had helped it weather the worst of the credit crunch.

However, pension experts said Barclays would be the first of many large corporations to close down their generous retirement schemes to existing staff following the widespread closure of schemes to new entrants in recent years.

John Ball, of pension advisers Watson Wyatt, said employers would take the opportunity of the economic downturn to enforce steep cuts in pension benefits. He said: "Resistance from employees, unions and trustees is likely to be lower in an economic downturn, especially if presented as an alternative to job cuts. If a few more household name companies take this step, there could be a snowball effect.

"At a time when many companies are introducing pay freezes or making people redundant, it is harder to justify pension benefits for long-serving staff which the people working alongside them do not enjoy. Employees know it is tough out there and changes to pension benefits look more attractive than job losses."

A combination of low interest rates, poor investment returns and increasing life expectancy has hit guaranteed pension schemes in recent years. Most FTSE 100 firms have already closed their scheme to new entrants. This week BP joined the list with the announcement that its new members would be offered cheaper arrangements.

Barclays closed its final-salary scheme to new entrants in 1997. For the following few years, staff joining the bank were offered a scheme that relied solely on stockmarket returns. However, pressure from staff and unions resulted in a change of heart and the bank introduced a safety net that protected scheme members from a severe equity downturn and poor investment returns.

Many pension experts called for the scheme to be more widely adopted as a half-way house between the generous final-salary scheme and cheaper money purchase arrangements that transfer the risk of pension returns to workers.

Spiralling costs

Rob MacGregor, Unite union national officer, said today that staff would be very angry. "Unite views this proposal as a break in the promise by Barclays to their workforce that they will not put profits before people.

"This attack on the pensions of the loyal and hard-working staff at the bank is utterly alarming. The union is urging the bank not to establish this change."

John Varley, its chief executive, is the only board member to be affected by the move. He is expected to join other directors, including president Bob Diamond, in setting up his own retirement plan. Varley said in a letter to staff that costs had spiralled and would place a burden on the bank that would restrict its growth.

"For example, at 30 September 2007, the last valuation of the UKRF [UK Retirement Fund], there was a surplus of £200m. At the funding update as at 30 September 2008, this surplus had become a deficit of £2.2bn," he said. This position is likely to have worsened since then. These are huge numbers within the context of our market capitalisation, and our P&L [profit and loss] account.

"We must address the funding position ... [and] we must be absolutely certain that we can continue to meet our pension obligations and continue to manage efficiently the costs of the provision of the pension schemes."

A Barclays spokesman said a review of the pension arrangements with the Barclays UK Retirement Fund would take place with trade unions over the coming months.