Emma Douglas, Director of Workplace Savings & Retirement at Aviva comments on the Department for Work and Pensions (DWP) ‘Workplace pension participation and savings trends: 2009 to 2021’ figures. |
“The resilience of UK workers is something to celebrate. Despite the challenges created by the pandemic, the percentage of workers saving into their pension held steady at 88% of all eligible workers last year. Over 20 million eligible workers saved £114.6 billion into workplace pensions in 2021, up £2.9 billion from 2020. Today’s figures show how hard-pressed workers continued to rank the importance of their pension throughout the pandemic. “Today’s figures also reveal a startling gap in the pension contributions of men and women. Women in the private sector benefit from total contributions (2) of 25% less per year than their male colleagues. This is £1,500 on average for eligible female workers versus £2,010 for eligible male workers.”
Aviva calls for ‘roadmap’ to removing auto-enrolment thresholds
One significant change government could make to help women in this position would be to remove the automatic-enrolment (AE) lower qualifying earning threshold (LET). It would mean those in a pension scheme would get a contribution from the first pound they earn. It can be implemented without the need for legislation and has already been promised by government for the “mid-2020s”.
Emma Douglas said: “Now is not the time to make changes to contribution rates but we shouldn’t overlook the opportunity to set a course for the future. We welcome the recent freeze of the lower qualifying earnings threshold (LET), particularly because we support a phased approach to its eventual removal.
“We are calling on government to put a ‘roadmap’ in place now for how and when it will implement the removal of the LET. A phased approach should help to ease any sudden financial impact on employers and employees. Employers and employees need time to plan.” |
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