date: 13 December 2012
embargo: For immediate release
The TUC has today (Thursday) warned that the government's decision to raise the earnings threshold for auto enrolment into workplace pensions to £9,440 from next April will exclude hundreds of thousands more staff, most of whom are women, from saving into a workplace pension.
Currently staff must earn at least £8,105 in order to be auto-enrolled into a workplace pension. This earnings trigger already excludes around 1.3 million low-paid workers from being auto-enrolled into their staff pension scheme.
The government's decision today to raise the earnings trigger again to £9,440 from April 2013 will, according to its own estimates, exclude a further 420,000 low-paid staff from saving into a workplace, unless they voluntarily sign up.
Three-quarters of those affected by today's decision are women, who already have less pension savings than men and are supposed to be a core target of auto-enrolment, the TUC says.
The TUC has warned that raising the earnings trigger by 16.5 per cent - more than ten times as fast as average wage growth (1.4 per cent) - will push many more people out of automatic workplace pension saving. If it is subsequently raised to £10,000 over two million low-paid workers could end up missing out.
TUC General Secretary Brendan Barber said: 'Today's decision to raise the earnings trigger is disastrous for millions of low-paid staff who are not saving enough for their retirement.
'Everyone agrees that more people need to save for their retirement if we're to address our growing pensioner poverty crisis. It is very worrying therefore that millions of low-paid staff, particularly women working part-time, will no longer be auto-enrolled into workplace pensions.
'It has taken a decade to achieve a consensus around the need for better workplace pension provision. Excluding more and more people from auto-enrolment is undermining plans to improve people's retirement income and tackle old-age poverty.'
NOTES TO EDITORS:
- Under auto-enrolment, employees pay pension contributions on earnings above the lower earnings limit (£5,564) but are only automatically enrolled into a workplace pension if they earn over the current earnings trigger (£8,105).
- According to the latest official published data, around 1.3 million employees earn between the lower earnings limit and the currently earnings trigger, while around 2.4 million employees earn between the lower earnings limit and £10,000.
- All TUC press releases can be found at www.tuc.org.uk
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Issued: 13 December, 2012