Changes to the threshold when workers have to be automatically enrolled will exclude an additional 170,000 workers, the majority of whom are women, according to the Trades Union Congress (TUC).
Over the next few years, the process of Automatic Enrolment will see all workers over the age of 22, who earn more than a set threshold, automatically enrolled into a pension. The threshold is linked to the Personal Allowance, £9,440 for the 2013/14 tax-year, but set to rise to £10,000 from 6th April 2014.
Whilst the rise in the Personal Allowance, the amount an individual can earn before they start to pay tax, is generally welcome news, it will also push up the threshold for when workers need to be automatically enrolled into a workplace pension.
170,000 workers to miss out
According to the TUC, the increase to the threshold when workers need to be automatically enrolled will see 170,000, mostly part-time workers, miss out on valuable pension contributions. The majority, 120,000, are women, who tend to get lower State Pensions due to periods of time raising children, making Automatic Enrolment even more valuable to them.
The TUC has called for the link between the Personal Allowance and the threshold where workers have to be enrolled into workplace pensions to be broken, to allow larger numbers of lower paid workers to benefit.
Commenting on the figures, TUC General Secretary Frances O’Grady said: “Every time the government raises the auto-enrolment threshold another group of workers, most of whom are women, drop out of saving for their pension.”
O’Grady continued: “With the average part-time salary just under £9,000 a year, the majority of the UK’s six million part-time workers will no longer be automatically enrolled into a workplace pension. It is time to break the link between the income tax threshold and the auto-enrolment threshold unless we want to turn auto-enrolment into a pensions system that predominantly benefits men.”