New data published today by the Office for National Statistics reveals that 253,424 employees in Wales – 20% of the Welsh employee workforce – 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 UK 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 in the UK 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 than men 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.
Wales TUC General Secretary Shavanah Taj said:
“Automatic enrolment has helped many more working people get pension contributions from their employer.
“But the current rules exclude lots of low-paid, insecure and young workers. And that’s why so many people in Wales still don’t have a workplace pension.
“No more excuses – it’s time the UK government stepped up and ended this injustice. Pension schemes are a vital part of people’s earnings. There should be a pension contribution in every pay packet.”