Will Auto Enrolment Create A Two Tier Society?

The Pensions Regulator has been pleased with the initial implementation of auto-enrolment for large firms but there are worries that more workers are being excluded than included due to the regime’s qualification criteria.

In its first assessment of auto-enrolment, The Pensions Regulator were quoted as saying that it had got off to a “good start”. Over 1,150 employers have now completed registration and more than a million workers have been auto-enrolled.

However, it is estimated that 1.7 million workers at companies covered by auto-enrolment had not been signed-up as they do not qualify because they either aren’t old enough or don’t earn enough. There are literally millions of of part-time workers that will  be overlooked because of their earnings,  likewise the self-employed are excluded.

Workers under 22, over state pension age, or earning less than £9,440 a year are not automatically enrolled into their company’s scheme. However, younger workers are not a major concern, as the feeling is that the system will capture them eventually.

However, those under the earnings threshold are deemed as a particular concern. As stated, part-time workers were particularly at-risk, which disproportionately affected women as three quarters of part-time workers are female.

Part-timers are being encouraged to join their company scheme if they can afford to, as the alternative could be relying on the state pension which does not provide a high income, and is subject to change.

The Auto Enrolment scheme, while laudable, is in danger of creating a two tier society leaving part-time workers and the self employed outside its remit.