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% |
NOTES TO EDITORS
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