Millions missing out on pension scheme

Many workers don't qualify, while others are failing to enrol

Figures announcing the millionth worker automatically enrolled into a workplace pension have also revealed that huge swathes of the working population have already been left behind.

Introduced last October in a bid to reverse the decline in pension saving, the largest firms have started signing up staff to the nationwide scheme, with medium and small-scale companies set to follow suit between now and 2018.

Announced with much fanfare by the government, Steve Webb, the Minister for Pensions, described the millionth sign-up as "a real landmark in this quiet revolution". "The money that workers save is being matched by contributions from their employers and topped up by tax relief, helping them put money aside for their retirement," he said

But while it is a positive move for the million-plus people now saving more for older age, the same data shows that this number is dwarfed by the 1.7m workers who haven't been signed up because they don't qualify. With only 1,153 companies actively involved so far, 3.8m workers or more are at risk of missing out on valuable employer contributions.

Those who earn less than £9,440 and are under 22 or over the state pension age don't qualify for the scheme automatically and will need to actively opt in, warns Laith Khalaf, head of corporate research for financial adviser Hargreaves Lansdown.

"Automatic enrolment is a vitally important project, but it is not a silver bullet. Millions of part-time workers are going to be overlooked because they don't earn enough. Likewise, the self-employed are excluded.

"There is still a pressing need to foster a savings culture alongside auto-enrolment, and to provide a decent level of state pension."

It is hoped that the scheme will catch up with the under‑22s as they grow older, but for those over the state pension age, auto-enrolment simply can't help them. Meanwhile, women workers, who make up three- quarters of British part-time workers, are also at risk of falling through the gap.

Of the 6.7m part-time workers in the labour force, about 3.8m of them earn under £9,440 and consequently won't be automatically enrolled into a pension, though they can opt in. An estimated 1.8m of these workers could benefit from an employer contribution if they were to opt in to their company pension scheme. Any worker earning over £5,668 can opt in to a pension and their employer is also obliged to pay in. Employers must inform eligible staff of the right to opt in to the company pension and get an employer contribution.

For each £100 a worker pays in under auto-enrolment, the government adds £25 and their employer would add £75. In other words, for a £100 personal investment £200 is paid into a pension – doubling your money instantly.

"An estimated 1.8m part-time workers will be eligible for an employer pension contribution under auto-enrolment, but only if they opt in to their company pension scheme," Khalaf adds.

"They should consider doing this. An employer contribution is an extremely valuable savings boost and should not be given up lightly."

Independent Partners: 10 top tips for retirement. Get your free guide here

Arts and Entertainment
musicBand's first new record for 20 years has some tough acts to follow
peopleAt least it's for a worthwhile cause
A new app has been launched that enables people to have a cuddle from a stranger
voicesMaybe the new app will make it more normal to reach out to strangers
Liam Payne has attacked the media for reporting his tweet of support to Willie Robertson and the subsequent backlash from fans
peopleBut One Direction star insists he is not homophobic
Life and Style
healthFor Pure-O OCD sufferers this is a reality they live in
Life and Style
Sexual health charities have campaigned for the kits to be regulated
healthAmerican woman who did tells parents there is 'nothing to be afraid of'
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Trainee / Experienced Recruitment Consultants

    £20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

    Trainee Recruitment Consultant - Soho

    £20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

    Trainee Recruitment Consultants - Banking & Finance

    £20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

    Quantitative Risk Manager

    Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...

    Day In a Page

    A roller-coaster tale from the 'voice of a generation'

    Not That Kind of Girl:

    A roller-coaster tale from 'voice of a generation' Lena Dunham
    London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

    London is not bedlam or a cradle of vice

    In fact it, as much as anywhere, deserves independence
    Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

    Vivienne Westwood 'didn’t want' relationship with McLaren

    Designer 'felt pressured' into going out with Sex Pistols manager
    Jourdan Dunn: Model mother

    Model mother

    Jordan Dunn became one of the best-paid models in the world
    Apple still coolest brand – despite U2 PR disaster

    Apple still the coolest brand

    Despite PR disaster of free U2 album
    Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

    Despite the result, this is the end of the status quo

    Boyd Tonkin on the fall-out from the Scottish referendum
    Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

    Manolo Blahnik: Flats, Englishness, and Mary Beard

    The shoe designer who has been dubbed 'the patron saint of the stiletto'
    The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

    Scrambled eggs and LSD

    Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
    'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

    'Normcore': Blending in is the new standing out

    Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
    Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

    New leading ladies of dance fight back

    How female vocalists are now writing their own hits
    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments