Scottish Widows Retirement Report: the findings

News


12 Jun, 2018

Scottish Widows Retirement Report: the findings
 
The latest Scottish Widows Retirement Report has found that those with multiple jobs are missing out on £90m of employer pension contributions because they do not meet the minimum wage threshold.

Under current rules, only those that are earning more than £10,000 a year in one job are automatically enrolled, excluding nearly 2 million ‘multi-jobbers’ whose income is split.

Robert Cochran, retirement expert at Scottish Widows, said: “This year’s study shows some of the hardest working and most financially vulnerable members of society are slipping through the auto-enrolment net because of minimum earnings thresholds. This unfairly impacts multi-jobbers, who could be working the equivalent of full-time hours, yet without the financial benefit of having a single employer.”

However, financial services firm Quantum partner and actuary Stuart Price is calling for the £10,000 cap to be abolished, allowing all workers between 18 and state pension age to be included.

He says: “When auto enrolment was reviewed at the end of 2017, one of the outcomes was for the net to be widened so that 18-year olds will be included from the mid 2020’s.

“While this is a step in the right direction, I believe the government should have also removed the minimum wage requirement. 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.”

 The Scottish Widows Report concludes: “There is strong evidence that auto-enrolment continues to show a positive impact on the number of people saving for their future. This latest report reveals the number of under-30s saving enough for retirement has risen sharply by 9 per cent. However, more than one in five young people (21 per cent) are still saving nothing for later life, with a further 20 per cent saving seriously less than 12 per cent of their income – the minimum amount recommended by Scottish Widows.”