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Employee Benefits News

Latest News
07 Apr 2014

Auto-Enrolment Threshold Increase To Hit Women Working Part-Time

The earnings limit for employees eligible for automatic enrolment increased at the start of this month leaving thousands of workers out of the pension scheme, The Guardian reports.

Women working part-time are the hardest hit as a result of the auto-enrolment eligibility threshold hike, as their income is not be sufficient to join a workplace pension scheme. As of 1 April, the minimum income required to qualify for auto-enrolment rose to £10,000 from £9,440. It is estimated that up to 170,000 workers will be left out of the scheme as a result of the reform – with around 120,000 of them being women.

It is anticipated that auto-enrolment will have a dramatic effect on Britain´s pension saving culture, with the government believing that millions of employees will be saving in pension pots for the first time. This will provide them with a reliable income in retirement and allow them to plan for their future, as well as averting the potential pension crisis.

Under the scheme, employees´ own savings are doubled, thanks to contributions from their employer and the government. This means that if a worker saves £100, the government will add £25 and employers will contribute a further £75 to their pension. Once workers are enrolled, they can opt out if they want to. Preliminary estimates by the Department for Work and Pensions forecast about a 30% opt-out rate at the end of the auto-enrolment process, the Guardian states.

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