Women in work twice as likely as men to have no pension pot

Women in work twice as likely as men to have no pension pot

New research by the Pensions Policy Institute, sponsored by Age UK, shows that a third of women in work are not eligible for automatic enrolment into a workplace pension, leaving many at risk of not having a decent income in later life. This compares with 16 per cent of male employees.

The paper highlights that just under a quarter (23 per cent) of all employees do not meet the qualifying criteria and of these 57 per cent are ineligible because they earn less than £10,000 a year.

This illustrates not only the problems faced by many women workers but also disabled workers,  ethnic minorities, recipients of Carer’s Allowance, those with more than one part time job and people who work in the service industry.

The research also reveals:

  • 81 per cent of workers receiving Carer’s Allowance do not qualify for automatic enrolment.
  • Ethnic minority groups are less likely to meet the qualifying criteria. For example, about a third of Pakistani and Bangladeshi workers are not eligible, compared to 23 per cent of white workers.
  • 30 per cent of disabled workers (900,000 people) are also not eligible
  • Only 55 per cent of people working in the service industries are eligible compared to 80 per cent in most other sectors.

These figures, however, only include people who are employees, and there are many more who do not qualify because they are self-employed or not in work. Of the total population aged 16-64 about half qualify for automatic enrolment.

Caroline Abrahams, Charity Director at Age UK said:

“While automatic enrolment has so far been a resounding success at engaging more people in pension saving, these figures show that many lower earners are being excluded from workplace pensions. We must make sure that more people benefit so they do not reach retirement with an empty pension pot. We would like to see the auto-enrolment threshold lowered, so more people can enjoy a better-standard of living in retirement.

“With people living longer it is more important than ever that people get the chance of a private pension.”

Daniela Silcock, Head of Policy Research at the Pensions Policy Institute said:

“This research highlights that while automatic enrolment is helping many lower paid people to save in a workplace pension; employed people from disadvantaged groups are disproportionately likely to be ineligible. Policy-makers will want to observe trends and assess whether any people are in danger of being excluded from automatic enrolment for the long term.”

The Pensions Act 2008 provided automatic enrolment into workplace pension schemes and the scheme began in 2012. By the end of June 2015 20.2 million workers had been assessed for eligibility. 9.3 million were already members of a qualifying scheme, 5.3 million people were automatically enrolled into a workplace pension scheme. However 5.2 million people working were found to be ineligible.