PENSION savings are vital for many people who are planning their lives after departing from the workforce. However, new research has revealed many women could be missing out.
Pension saving can be undertaken in a variety of ways which can combine to help people achieve the retirement they hope for. A particularly important form of pension saving is through workplace arrangements. Most workplace pension arrangements involve individuals putting a certain percentage of their salary aside to slowly build up a fund ready for their retirement.
This is not an endeavour which is undertaken alone, however, with employers also required to contribute.
The process is frequently known as auto-enrolment, which makes it compulsory for employers to automatically enrol workers who are eligible into a pension scheme.
From April 2019, the minimum an employer pays is three percent of a person’s salary, with employees required to put aside five percent.
However, there are eligibility rules which have to be fulfilled to trigger auto-enrolment.
And new research has revealed many women are falling outside of these rules.
As a result, they could be left without valuable pension contributions which could help them towards their retirement.
The Resolution Foundation, an independent think-tank, has revealed one in four working women are not eligible to receive a workplace pension.
This is compared to the 15 percent of men who are currently missing out.
The reasons women are missing out may be varied, however, the rules are a significant factor.
Government rules dictate an employer must automatically enrol staff if the following circumstances apply:
- the individual is classed as a ‘worker’
- the individual is aged between 22 and State Pension age
- the individual earns at least £10,000 a year
- The individual usually works in the UK
This is likely to have an impact on part-time and flexible workers, who are predominantly women.
The pension gender savings gap has proven a particular issue within the sector.
Research recently undertaken by Close Brothers, an asset management firm revealed the widening gap in savings.
It said women’s retirement pots currently lag behind their male counterparts, at £73,000 compared to £162,000.
The Resolution Foundation study also revealed 800,000 workers are facing a circumstance known as ‘under-enrolment’.
This is where workers are receiving less than the law legally requires companies to give, or even in some cases, nothing at all.
The issue has been found to be particularly acute among minimum wage employees alongside agency staff.
And women have also been found to be bearing the brunt of the issue within the workplace.
Hannah Slaughter, Economist at the Resolution Foundation, commented on the findings.
She said: “The auto-enrolment of ten million workers into company schemes since 2012 has been both a huge policy success, and a major boost to the retirement incomes of millions of households.
“But while the focus of auto-enrolment has now turned to raising contributions and extending eligibility rules, policy makers need to add a third issue to the debate – tackling ‘under-enrolment’ where workers receive less than the legal minimum contributions, or no contributions at all.”