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Women Missing Out Under Automatic Enrolment - HL Comment

Pensions Policy Institute have released research into the abolition of the Earnings Trigger and Qualifying Earnings under auto-enrolment (available here).

The research highlights that those in employment being left behind in the retirement saving revolution are those working part-time and so inadvertently it is women who are not being well served by current legislation.

Nathan Long, Senior Pension Analyst at Hargreaves Lansdown:

"Auto-enrolment has been a huge success in terms of getting more people saving, but three groups remain largely out in the cold; the low paid, the self-employed and those working part-time. Any review of auto-enrolment 2017 must address the shortfalls that impact on these groups, whilst remembering that employer support of pensions remains critical to ensuring sufficient saving levels. The vast majority of part-time workers are women who are being inadvertently discriminated against.

A change so contributions are accrued from the first pound of earnings would be a smart decision. Too many low paid workers are now in pensions believing they are on the way to a comfortable retirement when currently the first £5,824 attracts no contribution whatsoever.

Lowering the earnings trigger would also help bring more part-time workers into retirement saving. A reduction from the current £10,000 to an earnings trigger equivalent to the New State Pension would be a more joined up policy and get more people saving."

What are qualifying earnings?

The earnings trigger is the level of earnings at which point an individual is automatically enrolled into their workplace pension providing they are aged between 22 and State Pension Age.

Impact of change to qualifying earnings and the earnings trigger

Individual Current system No band earnings No earnings trigger and band earnings
Full-time throughout £33,100 £62,200 £62,000
Increase on current system 87% 87%
Slow start £25,000 £47,100 £53,200
Increase on current system 88% 112%%
Caring break to part-time £11,400 £21,400 £33,200
Increase on current system 86% 190%
Caring break to full-time £22,800 £42,900 £42,900
Increase on current system 88% 88%
Dovetailing at the end of a career £26,100 £48,900 £54,200
Increase on current system 87% 107%
Two part-time jobs £25,800 £49,700 £62,200
Increase on current system 140% 200%
Median Earner £92,300 £121,400 £121,400
Increase on current system 31% 31%
High earner £172,500 £244,200 £244,200
Increase on current system 42% 42%


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