A third of women in work are ineligible for auto-enrolment into a workplace pension, compared with 16 per cent of male employees, leaving many at risk of not having a decent income in later life, according to new research.
Age UK commissioned the Pensions Policy Institute to examine whether different demographic groups meet the auto-enrolment criteria, finding that 23 per cent of all employees do not meet the qualifying criteria and 57 per cent of these are ineligible because they earn less than £10,000 a year.
The paper stated that this illustrates not only the problems faced by many women, 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 showed that 81 per cent of workers receiving carer’s allowance do not qualify for auto-enrolment, while ethnic minority groups are less likely to meet the qualifying criteria and only 55 per cent of people working in the service industries are eligible, compared to 80 per cent in most other sectors.
These figures only include people who are employees, with the PPI pointing out 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 auto-enrolment.
Caroline Abrahams, charity director at Age UK, said that they 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.”
Andy McCabe, managing director at Selectapension, said warned that it is “vital” for the industry to address the gender divide between men and women in saving for their future so that women, especially those on lower incomes, do not face a financial shortfall in their retirement.
Samantha Seaton, chief executive at eValue, added that the gender disparity proves auto-enrolment does not cater for today’s “modern flexible” working environment, of which women make up a significant number.
“While auto-enrolment will cater for those earning more than £10,000 a year, other part time working mums or self-employed women should seek safety through a private pension.
“At a moderate investment growth, saving just £10 a week from the age of 25 could create a pension pot of over £100,000 by 65, as opposed to £50,000 when left in your bank account,” she added.
“Communicating tangible outcomes with this group could help provide the motivation to take out a personal pension.”
ruth.gillbe@ft.com
