Auto-enrolment is a Government initiative designed to encourage workers to save for their retirement. By 2018 all employers must enrol their eligible employees into a workplace pension scheme and the employers must contribute to it. Employees can opt out if they wish but the reality is very few do. Since its introduction in 2012 over 440,000 workers in Scotland are now saving into a workplace pension as a result of auto-enrolment.
By the time the roll out is complete the majority of workers in Scotland will have access to a workplace pension that will include an employer contribution of at least 3% of salary by April 2019.
The Government review of auto-enrolment is currently taking place however there is no requirement to change anything as a result of this review.
As we are all aware Brexit negotiations will extend well into 2018 and beyond taking up much of the UK’s government’s time, however we can’t allow them to use this as an excuse to stall long term domestic pension policy.
Despite the general consensus that Auto-enrolment has been a success, changes have to be made. It must be made simpler, fairer and open to all. In particular, the review must address the discrimination against the low paid and bring more women and people on low incomes into auto-enrolment.
A major problem with the current approach is that to be eligible you need to earn at least £10k a year in one job. This excludes many part-time workers who have an income over £10k which comes from multiple jobs.
We need action to change the auto-enrolment eligibility criteria so that more women qualify. By bringing together low income multiple jobs –would allow workers with more than one job to benefit from an employer contribution which they currently do not. At the moment these workers are exempt because their earnings are looked at individually rather than combined and they are considered to be below the £10,000 threshold.
Recent figures show that 60,000 women in the UK would immediately benefit if the threshold changed to allow more than one job to be taken into account. Since the financial crash there’s been a massive increase in part-time roles, the majority of which are done by women and government policy on pensions must reflect this.
Widening the scope of AE must be at the heart of the review so that more women can benefit from an employer contribution and start saving.
Women already lose out on pensions in so many other ways. On average their pensions are worth 1/3 less than mens due to lower pay and the earnings threshold on auto-enrolment is yet another contributory factor to the continued widening of the gender pensions gap.
We need a pensions policy that works for everyone.
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