In Focus: Retirement Income  

Multi-jobbers miss out on £76m in pension contributions

Multi-jobbers miss out on £76m in pension contributions

Low earners with multiple jobs are missing out on £76m a year in employer contributions to their pension due to an ‘unfair system’, according to Scottish Widows.

With more than 4m people in the UK having more than one job, Scottish Widows is calling for the government to scrap automatic enrolment thresholds. 

This is because workers who earn less than £10,000 a year in a single job are not eligible for auto-enrolment, even if they have multiple jobs which take them well above this threshold.

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Analysis by the provider found almost half (49 per cent) of multi-jobbers earning under the threshold were not enrolled in their company pension as a result, compared with almost a quarter (23 per cent) across all employees.

Workers earning between £6,240 (the lower earnings limit) and £10,000 a year can still opt into their company pension themselves and their employer is legally required to also contribute 3 per cent.

But the research found almost half (48 per cent) of people didn’t know this. 

Two in five (43 per cent) people believed all workers were automatically opted in regardless of how much they earned and 5 per cent of those who had multiple jobs and at least one paying under the £10,000 threshold had been refused enrolment into the company pension by their employer. 

Scottish Widows said this suggests either employers did not understand the rules, or that they were preventing access to workers - which would be illegal.

The provider first highlighted this issue in 2018, but the barrier to automatic enrolment based on earnings still exists. 

Since then, the individual impact has become even more acute, as the minimum contribution employers must pay in for eligible workers increased from 2 per cent of earnings to 3 per cent in April 2019.

But Scottish Widows warned this problem could “explode” against the backdrop of Covid-19, revealing that more than half of current multi-jobbers (55 per cent) had taken on an additional job since the start of the pandemic. 

This means even more potential earnings not being saved into a pension, not benefiting from tax relief nor being matched by employer contributions.

Pete Glancy, retirement expert at Scottish Widows, said: "While auto-enrolment has been a game-changer for boosting the workplace pension pots of millions across the UK, those whose income comes from more than one job are losing out significantly relative to those with the same income from a single job.

“This was an issue that we first highlighted in 2018 based on research conducted at that time, and our latest research suggests that the problem is not going away.   

“A shift towards more multi-jobbers will reverse some of the gains made by auto-enrolment, so the argument to remove the earnings threshold is getting stronger and should be a top priority for the next evolution of the scheme.”

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