Ticking time-bomb of pension holes
Don't get old. A new report shows that in some industries important in the north east, like hospitality and agriculture, six in ten workers are not saving into in a pension.
That is not their fault, but due to antiquated rules that keep the fat cats happy.
The result is a ticking time-bomb, leading to poverty in retirement for millions.
A TUC analysis found that many are missing out on a decent retirement because they earn less than £10,000 – the level at which bosses must enrol someone into a workplace pension. Nearly nine million UK workers are excluded.
The five industries with the lowest level of pension cover are: agriculture, forestry and fishing (65 per cent of employees, 93,000, do not have a pension); hospitality (60 per cent, 908,000); other services, such as hairdressing and beauty (56 per cent, 270,000); construction (50 per cent, 493,000); and arts and entertainment (48 per cent, 253,000).
The TUC also found evidence of a ‘pension lottery’.
In low-paid sectors, like wholesale and retail, nine out of ten savers received contributions worth less than eight per cent of salary from their employer. By contrast, in well-paid industries, like financial services, the vast majority received much more.
Another report by the Defined Benefits Taskforce found that three million members in the most vulnerable pension schemes have only a 50/50 chance of receiving full benefits because of the deficit in the schemes.
Around 60 per cent of the schemes identified as vulnerable were in manufacturing and retail. The remaining 40 per cent came from areas such as general services, transportation, construction and farming.
The move towards auto-enrolment has been a success, but there’s a lot more to be done.
The TUC is right to call on the government to help more low-paid workers to join schemes and set out plans for increasing contributions from employers.