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Pensions

Multi-jobbers hit by DC income cap

Multi-jobbers hit by DC income cap

Mona Dohle
Tuesday 12th June 2018

Calls to scrap the minimum income cap for auto-enrolment into workplace pension schemes have increased among growing reports that a large section of the UK workforce remains excluded from retirement provisions.

The current auto-enrolment rules specify that employees should be automatically enrolled into a workplace pension scheme if they earn at least ÂŁ10.000 per year in a single job. While the introduction of automatic enrolment rules has boosted participation levels among younger workers, income and gender inequalities persist.

According to a TUC study, this affects 4.6m workers, or 17.6% of the UK workforce. The trade union body also highlights that the trigger is particularly unfair for those people who hold multiple jobs where their combined income would bring them over the ÂŁ10.000 threshold. Women are disproportionately affected; they represent 70% of multi-jobbers earning more than ÂŁ10.000.

According to recent research by Scottish Widows, multi-jobbers are missing out on ÂŁ90m of employer pension contributions.

Stuart Price, partner and actuary at independent financial services consultancy Quantum Advisory, is calling for the ÂŁ10,000 cap to be scrapped so that all workers from the age of 18 to State Pension Age would be included

“As well as ensuring many more would be saving for their retirement provision – which would overcome this multiple job issue – it would also make the auto enrolment administration process easier for employers and pension providers. A simplified system could also mean a reduction in the charges passed on to members” Price stresses.

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