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Over half a million low-paid workers, 80 per cent of whom are women, could lose thousands of pounds in employer pension contributions if ministers go ahead with plans to raise the earnings trigger for people to be auto-enrolled into workplace pensions, the TUC warns today (Friday).

date: 10 October 2012

embargo: 00.01 Friday 12 October 2012

Over half a million low-paid workers, 80 per cent of whom are women, could lose thousands of pounds in employer pension contributions if ministers go ahead with plans to raise the earnings trigger for people to be auto-enrolled into workplace pensions, the TUC warns today (Friday).

Under pensions auto-enrolment, which started for staff in big companies earlier this month, employers and employees will pay contributions on earnings above £5,564, but only if staff earn above £8,105. However, the government is currently consulting on raising the lower earnings limit and the earnings trigger to £5,720 and £9,205 respectively.

The TUC submission to the government's review of auto enrolment thresholds for 2013/14 warns that raising the earnings trigger for auto-enrolment will cause hundreds of thousands of low-paid workers to miss out, unless they voluntarily sign up to the scheme.

TUC analysis of official earnings data shows that around 3.5 million workers earn less than £8,106 a year, and would therefore not be automatically enrolled into a workplace pension. Raising this trigger to £9,205 next April will mean a further 585,000 staff will fall below the earnings trigger.

Of those workers set to miss out on auto-enrolment if the earnings trigger is raised, 457,000 (78 per cent) are female and 506,000 (86 per cent) are part-time workers. Low-paid women and part-time workers are the least likely to be saving into a workplace pension and should be a core target for auto-enrolment, not the focus of those excluded from it, says the TUC.

If the government continues to raise the earnings trigger in line with the personal allowance, which will eventually rise to £10,000, an additional half a million workers could miss out on auto-enrolment.

The TUC submission is calling on the government to freeze the earnings trigger for auto-enrolment at £8,105, as well as the lower earnings limit at £5,564.

The TUC also wants the upper limit on employer contributions to be increased to £42,971 so that the proportion of earnings upon which pension contributions are made steadily rises each year.

TUC General Secretary Brendan Barber said: 'After years of union campaigning it's great to see pension auto-enrolment finally starting.

'With two thirds of employees no longer saving into a workplace pension, auto-enrolment cannot come soon enough if we are to start tackling the UK's growing pensioner poverty crisis.

'It's disappointing therefore to see that over half a million low-paid workers could soon be missing out. Women and part-time workers are the least likely to save into a pension. They should be a core target for auto-enrolment, not the main losers from government plans to restrict access to the scheme.

'The government should show they are fully committed to auto-enrolment by ensuring that as many people as possible are eligible to be enrolled into saving for a pension.'

NOTES TO EDITORS:

Number of employees by earnings level

Less than £5,720

£5,720 to £8,105

£8,106 to £9,204

£9,205 to £10,000

Total employees £8,106 to £10,000

All employees (thousand)

2,170

1,341

585

438

1,023

Males (thousand)

581

309

124

99

223

Females (thousand)

1,586

1,021

457

336

793

Full time (thousand)

176

105

70

88

158

Part time (thousand)

1,996

1,223

506

342

848

Source: TUC estimates based on Annual Survey of Hours and Earnings, Office for National Statistics. Disaggregated figures may not add up to total due to rounding.

- The TUC submission to the government consultation on auto enrolment thresholds is available at http://bit.ly/UPy6k0

- All TUC press releases can be found at www.tuc.org.uk

- Follow the TUC on Twitter: @tucnews

- On Saturday 20 October thousands of people from across the UK will be heading to London for A Future That Works - a march which starts on the Embankment and ends with a rally in Hyde Park. The day is being organised by the TUC in protest against the government's austerity measures and calls for a new approach which puts growth and an economy that works for ordinary families at the heart of government policy www.afuturethatworks.org

Contacts:

Media enquiries:
Liz Chinchen T: 020 7467 1248 M: 07778 158175 E: media@tuc.org.uk
Rob Holdsworth T: 020 7467 1372 M: 07717 531150 E: rholdsworth@tuc.org.uk
Alex Rossiter T: 020 7467 1337 M: 07887 572130 E: arossiter@tuc.org.uk

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