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Auto-enrolment excludes millions of women

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workplace pension, auto-enrolment, part-time women, Frances O'Grady, TUC reportSignificant numbers of people, particularly women, are not benefiting from the roll-out of auto-enrolment.

A TUC report published earlier this week has found that more than three million part-time women workers are excluded from workplace pensions.

The report, ‘Unfinished Business: Building a fresh consensus on workplace pensions’, finds from an analysis of official data that 4.6 million UK workers earn less than £10,000, which is the trigger amount for automatic enrolment into a pension, due either to their age or low earnings.

Of these, 3.4 million are women.

More than half (57 per cent) of part-time workers earn less than £10,000 and by being excluded from automatic enrolment miss out on the employer contributions received by their colleagues.

And even workers whose earnings from multiple jobs total more than £10,000 also miss out on automatic enrolment.

Until auto-enrolment began to be rolled out in 2012, pensions saving in the UK was inadequate and getting worse. In 2012, membership of workplace pension schemes dropped to 46 per cent. This meant nearly nine million workers were not saving for their old age, against 10.5 million who were. Millions more were saving inadequate sums.

Compared to 2013, the highest growth in the proportion of employees with work place pensions was for full-time female employees in the private sector at 17 percentage points.

However, as the report shows, show significant numbers of people, particularly women, are not benefiting from the roll-out of auto-enrolment.

The TUC is calling for the government to use a planned review of automatic enrolment, which is due to report in 2017, to set out a roadmap for long-term development of workplace pensions.

The TUC says the roadmap should determine how more low-paid workers are to be brought into workplace pensions and contributions raised to a level that gives workers a good chance of a decent income in retirement.

The main findings are:

Automatic enrolment has brought members of many key groups into the workplace pensions system;

However, as it is currently constituted, many low-paid and part-time workers are missing out on workplace pensions. Women and those from certain ethnic minorities are most likely to fall into this category; and

Contribution levels remain inadequate for a decent standard of living in retirement.

The TUC’s key policy recommendations are:

The 2017 review of automatic enrolment should be as wide-ranging as possible and used as the opportunity for the government to engage with trade unions and the government to develop a long-term plan for the development of auto-enrolment;

Abolish the earnings threshold for employer contributions;

Simplify radically the system of band earnings; and

There should be a pathway to increase contribution rates with serious consideration given to an additional flat-rate contribution and auto-escalation.

The TUC’s General Secretary, Frances O’Grady, said: “Automatic enrolment has been a great success, giving six million more people access to a workplace pension.

“But millions of women workers are still missing out.

“We need to remove the barrier of the earnings trigger so that the millions of workers in part-time work, including those holding down multiple jobs, are automatically enrolled onto workplace pensions too.

“Too many people are only receiving the legal minimum pension contributions.

“We need a clear plan to increase the money going into pensions to give workers a good chance of a decent retirement.”

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