Women disadvantaged by auto-enrolment changes
Government proposals to increase the auto-enrolment threshold to £10,000 could put 1.8 million women at risk of missing out on a pension, the TUC has warned.
Under the auto-enrolment scheme, which will be phased in from October, private sector employers will automatically enrol workers between the age of 22 years and the state pension age, into an approved pension scheme.
Workers will contribute 5 per cent of their wages and employers will top this up with another 3 percent.
Only workers earning at least £7,475 a year will be included, but this threshold could now be increased in line with the income tax personal allowance which currently stands at £8,105, but could rise to £10,000.
As the majority of low-earners are female, the change would exclude 1.8 million women and 500,000 men from auto-enrolment, although they would still have the option of opting in to a pension scheme if they wished to.
TUC general secretary Brendan Barber said: “Whether this is the best way to help the low-paid is an interesting debate, but it would be disastrous if it had the unintended consequence of excluding a significant proportion of women workers from pensions saving”.
Meanwhile the government has announced plans to launch a consultation into private sector pensions later this year.
With the majority of final salary retirement schemes now closed to new members it wants to look into how workplace pensions can be “reinvigorated”.
The cost of final salary pension schemes has caused companies such as Shell and Unilever to move workers into defined contribution scheme, which provide a much less generous pension.
The consultation will aim to create a new type of pension scheme which will bridge the gap between the two options.
The proposed middle-ground scheme has been called “defined aspiration”.
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