Women Could Lose out in Auto-Enrolment
Auto-enrolment, effective from this October is designed to get more people putting money into pensions to ensure they have a decent retirement when the time comes.
However, there is a limit to the start point; they will only be made to go into the employer’s pension scheme when they earning the income tax threshold, which is currently £8,105.
This is a good plan for those on a steady full time income. The problem is part time workers and those with an irregular income will not be obliged to enter the company scheme and risk losing the benefits of saving for the future.
Approximately three quarters of the part time UK work force are women. They are also more likely to have fluctuating incomes due to variable working hours.
Those affected in this way will find their eligibility changes throughout the year depending upon their earnings. There is concern in the industry that the intricacies may put off eligible workers from staying in the pension scheme once finally enrolled.
Analysis reveals that women already face a tougher retirement with pension pots worth just two thirds (67pc) of their male counterparts, due to lower salaries and lower employee contributions towards retirement.
So it appears that auto-enrolment, whilst being a positive move to get millions more savers on board, will unfortunately be biased in favour of men, as they are more likely to earn above the threshold and part time workers will miss out.
One way of solving this is to lower the threshold.