Workers With Multiple Jobs Shortchanged £78M in Pension Contributions

Pensions provider Scottish Widows is calling for the government to scrap salary thresholds for automatic pension enrolment, as new research shows that people working multiple jobs are losing out on £76 million every year.

Research published by Scottish Widows this week reveals that nearly 1 million workers on the lowest salaries with multiple jobs are being shortchanged thanks to 'unfair' rules about who is entitled to automatic enrolment - and employer contributions - on workplace pensions.

Since 2012, UK law has required employers to make sure any workers earning more than £10,000 are enrolled in a workplace pension scheme as part of an opt-in system designed to nudge people to save for retirement. Under the current rules, employers must pay a minimum of 3% of workers' salaries into their pension savings each month.

However, any employees earning less than £10,000 per year are not automatically enrolled. While those paid between £6,240 and £10,000 can choose to opt-in and still benefit from employer contributions, there are no rules requiring employers to make contributions for anyone earning less than £6,240.

In addition, the current rules don't take into account a workers' total income, only how much they earn at each job.

As a result, people with multiple jobs who earn less than £10,000 at each one lose out on the protections guaranteed by law to single-salary workers.

Retirement Expert at Scottish Widows Pete Glancey 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.

According to the Office of National Statistics, there were at least four million people in the UK with more than one job as of February this year. More than half of multi-jobbers (55%) reported having taken on an additional job since the start of the pandemic- potentially raising the total value of potential contributions lost to loopholes in the system.

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, said Glancey.<

Worryingly, it seems many workers are not even aware of their right to be enrolled or aren't sure what is expected of their employers. The research found that nearly half (48%) of people earning in the £6,240-£10,000 band did not know they could opt into a pension scheme, while two in five thought their employers would do so automatically.

In March 2021, Pensions Secretary Guy Opperman confirmed plans to axe the £10,000 threshold by the mid-2020s at the Pension and Lifetime Savings Association (PLSA) conference.

The Department of Work and Pensions has issued no further details.