New data published today by the Office for National Statistics reveals that 6,349,000 UK employees are not receiving employer contributions to a workplace pension.
Auto-enrolment into workplace pensions has been in place since October 2012. It has helped increase the proportion of employees with workplace pensions from 47% in 2012 to 77% in 2019.
However, millions of workers are still excluded because employers do not have to automatically enrol staff earning less than £10,000 a year, or under the age of 22.
The rules also exclude the first £6,136 of pay when calculating the minimum contribution based on wages earned.
The combined effect means that low-paid workers miss out on up to £300 of annual pension contributions from their employer.
Part-time workers are at particular risk of missing out. Just 58% of part-time employees belong to a workplace pension, compared to 86% for full-time workers.
This means women are disproportionately affected, as they are three times more likely to be in part-time work.
The TUC says that workers generally need total contributions of at least 15% of their wage to be sure of a decent income in retirement.
The union body is calling on the government to remove the earnings limits, and to raise the minimum contribution required from employers.
TUC is calling on the government to:
- Remove the £10,000 trigger: so that all low-paid and part-time workers can be auto-enrolled, and the gender gap in pensions provision can be reduced.
- Remove the £6,136 lower earnings limit: so that all the hours a person works can count towards their pension.
- Reduce age qualification to 18 years old: so that millions more young workers can be auto-enrolled to a workplace pension.
They are also calling on the UK government to set out a roadmap of staged increases to minimum contributions to reach a total of 15% of wages, with at least 10% coming from the employer.
TUC General Secretary Frances O’Grady said: “Automatic enrolment has helped many more working people get pension contributions from their employer.
“But the current rules exclude lots of low-paid and young workers. And that’s why so many people still don’t have a workplace pension.
“No more excuses – it’s time the government ended this injustice.
“Pension schemes are a vital part of earnings. There should be a pension contribution in every pay packet.”