TUC: Act now or women will be condemned to retirement poverty

Almost one in every nine women (10.9%) work in jobs where their employers are not required to enter them into a workplace pension. The figure for men fewer than 1 in 20 (4.3%). 

Auto enrolment (AE) laws require employers to sign workers up to a pension if they earn more than £10,000 a year, and then make contributions on their behalf. 

Yet 1.4 million women earn less than this, leaving many without an occupational pension. 

The areas with the highest percentage of ineligible female workers are: Northern Ireland (15.2%); the West Midlands (14.5%); and Wales (14.2%). The region with the lowest number of ineligible women is London (7%). 

Figure 1: Percentage of employees aged 22-65 with earnings below the auto-enrolment threshold

Source: TUC analysis of the ONS Labour Force Survey, Q4 2022

But the young will still miss out 

AE is not triggered until a worker turns 22, though the government has recently announced plans to reduce this to 18. 

The TUC welcomed this move, but many young workers will still miss out, as they are in low paid and part time jobs.  

More than one in three (36%) younger women and one in eight (15%) younger men under the age of 22 do not earn enough to be auto enrolled. 

Figure 2: Percentage of employees aged 18-21 with earnings below the auto-enrolment threshold

Source: TUC analysis of the ONS Labour Force Survey, Q4 2022

Out of sight and out of mind

The reasons for the pension gap are simple, said the TUC in its report. They are due to women more often being the primary carers for children and elderly family members, they earn less, over time, due to career breaks, but also taking lower paid work in order to have the flexibility for their caring duties, and because they have not been captured by the AE system. The fact they pay less in national insurance over their working lives means they will also tend to have smaller state pensions. 

TUC general secretary Paul Nowak, said: “Women taking on caring responsibilities are a key driver of the gender pensions gap and the gender pay gap.  

“We need to invest more in childcare and social care, and in the women workers who overwhelmingly work in these professions. That’s a key way to close the gender pay gap.” 

On the need to bring more women into pensions auto-enrolment Paul Nowak added: “We need to fix our pension system so that all women can benefit from a decent income in retirement. But many are missing out on having any sort of occupational pension at all. Unless ministers act now, more women will be consigned to poverty in retirement. 

“Ministers should start by scrapping the earnings threshold for auto-enrolment. Workers should have the chance to build up a pension, regardless of how much they earn.” 

Government action required 

This year’s gender pensions gap is the highest since 2015–16, when it was 40.7%. That is the equivalent of £7,100 less pension income in 2020–21 for an average retired woman compared to an average retired man.  

The TUC called on ministers to take urgent action to close the gap more quickly, including the introduction of mandatory action plans along with pay reporting, including a statutory requirement for ministers to report on the gap. 

The TUC also called for the removal of the £10,000 earnings threshold, scrapping of the lower earnings limit, and increasing statutory minimum employer contributions from 3%. They also want to see funded, high-quality childcare, available to all, free at the point of use, which they say will fix the staffing crises in social care and childcare.