Whilst the new State Pension will deliver equally for both men and women, unfortunately this is not the case with occupational pension schemes at the moment, with men receiving on average a higher pension income than women. This is an issue that has been highlighted in a new report by the Pensions Policy Institute which assessed the impact of removing the £10,000 auto enrolment trigger and doing away with the qualifying earnings calculation from the auto enrolment calculation. A change in the rules of auto enrolment is required to ensure that 'covert discrimination' against women, part time and low paid workers ends and that they are given equal access to occupational pension benefits.
Key findings of the report by the Pensions Policy Institute include:
- If the earnings trigger was removed, 3.3 million more people would become eligible for auto enrolment.
- The calculations for auto enrolment minimum contributions are discriminatory against part time and low paid workers. 81% of part time workers are women.
- If 'qualifying earnings' were removed from the auto enrolment calculation it could increase the pension pots of part time workers by up to 140%.
- If auto enrolment was changed so that contributions were made on every pound earned then full time workers could see an increase in their pension pot of 87%. This is because under current rules, the first £5824 of an employer's earnings are ignored and anything over £43,000 is not included in calculations either.
- 77% of employees earning less than the auto enrolment trigger are women and over 50% of part time workers earn less than the auto enrolment trigger, 81% of these being women.
Frances O'Grady, General Secretary of the Trades Union Congress (TUC) said:
"Automatic enrolment has been a great policy success. It has ensured that millions of people have pensions with employer contributions for the first time. But millions more, the vast majority of them women and part-time workers, remain excluded. The government's review of automatic enrolment due next year needs to ensure that all workers have the opportunity to build savings for retirement."