Living Wage Foundation campaign to tackle work insecurity still leaves workers ineligible for AE
The Living Wage Foundation has launched a campaign to tackle work insecurity after research found one in six workers are in low-paid, unstable work.
Research for the Living Hours campaign showed around 5.1 million workers in the UK earn less than the real living wage - calculated by the foundation as £10.55 in London, and £9.00 across the rest of the UK - as well as facing cancelled shifts, unstable hours, and short-term contracts.
Under current automatic enrolment (AE) eligibility rules, a worker only qualifies if they are earning above £10,000 per annum from a single job. Now, the Living Wage Foundation's research suggests millions are missing out on the benefits of being enrolled into a workplace pension, including employer contributions and tax relief.
The foundation's programme, launched today (12 June) with FTSE 100 employers, will require organisations to pay the real living wage and provide a contract with a guaranteed minimum of 16 hours a week.
Yet even with these new rules, the lowest-paid workers would still not be eligible for AE, throwing support behind lowering the minimum threshold for workers to qualify for AE.
Now Pensions chief executive Troy Clutterbuck noted that while AE has "reenergised" pension saving in the UK, many of those who qualify are being "short changed due to the way contributions are calculated".
He added: "The lower qualifying earnings threshold means employees don't receive pension contributions on the first £6,136 of their earnings each year."
Aegon pensions director Steven Cameron said: "The workplace pension forms the basis of many people's retirement income and has been a successful catalyst for employees to begin saving, but much more needs to be done to help out those who are being left behind through ineligibility."
He continued: "Many individuals who are working part-time or are in the ‘gig-economy' are at risk of being excluded from retirement savings."
In February this year pensions and financial inclusion minister Guy Opperman revealed he will not speed up changes to AE despite the increasing pressure to boost overall saving pots.
Clutterbuck stated: "The government must give auto enrolled savings a shot in the arm by removing the auto enrolment £10,000 trigger and qualifying earnings band to allow people to begin saving if we are to solve these inequalities now and in the future."
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