Low-earning women
could be frozen out of plans to enrol workers
automatically in a pension scheme, the TUC has
warned.
The programme, which starts in October, will see
eligible employees becoming part of a pension
scheme unless they opt out.
Workers will be enrolled only if they earn at
least £7,475 a year, but this threshold
could rise to £10,000.
The TUC said that this shift could lead to 1.8
million women missing out.
It has called on the government to freeze the
earnings level at which auto-enrolment is
triggered.
"Whether this is
the best way to help the low-paid is an
interesting debate, but it would be disastrous
if it had the unintended consequence of
excluding a significant proportion of women
workers from pensions saving," said TUC general
secretary Brendan Barber.
Ros Altmann, director general of Saga, told the
BBC that women had lost out from the pensions
system in the past and were most likely to be
among the lowest earners.
About 500,000 male workers could also be affected
because they earned between £7,475 and
£10,000 a year, the TUC said.
The government has consulted on whether to raise
the threshold to bring it in line with the income
tax personal allowance, although workers below
this level could opt in to a pension scheme.
This would push the threshold up to £8,105,
but eventually could rise to £10,000 along
with the planned increase in the personal
allowance.
This was one option in the government's
consultation.
The Department for Work and Pensions said that the
consultation had taken place and a decision would
be announced soon.
Enrolment scheme
Under the scheme, employees will be automatically
enrolled into a pension scheme with employer
contributions if they are aged between 22 and the
state pension age, meet the earnings threshold and
are not already in a scheme that meets minimum
standards.
Once enrolled, employees can opt out, but saving
in a pension will be the new default setting for
anyone who does not express a choice.
Eventually, the automatic level of contributions
must be at least 8% of the individual's
"qualifying earnings". This includes 3% that must
come from the employer. These contributions are
being phased in.
Qualifying earnings include payments such as
overtime and commission, not just salary. But an
individual's first £5,564 of earnings will
not count and nor will any earnings above
£39,853.
The largest employers will start enrolling workers
in October, with others following in subsequent
years.
