“Income follows member” – how we enrol people with lots of small jobs.

multi-jobber 2.png

multi- jobber?

It’s strange how little we know about people with lots of jobs. But thinking about my friends, many have multiple sources of income from multiple employers. At one-end, of the spectrum there are people who have a portfolio of Non Executive Directorships – at the other are people who do three or four part-time jobs to make ends meet.

Problem?

It seems Government has difficulty too. In an excellent interview with Citywire’s Jack Gilbert, Richard Harrison points to an “earnings trigger anomaly” where people with lots of small incomes miss out on auto-enrolment each time. I doubt that most of the people who miss-out know they are missing out, and feel particularly aggrieved not to have been enrolled, but they are people being left behind and as we said on Accounting Web in 2013 – “No-one gets left behind”!

So I’m really pleased to see the Pensions Minister bringing it up, and I will bring it up again – at the Sage Summit –  this afternoon and tomorrow. Richard Harrison is dropping a heavy hint that the trigger will take into account of these multi-jobbers and the question is how.


Solutions?

The simple solution would be drop the earnings trigger from its current £10,000 to a lower figure. This would be more inclusive but would drag into auto-enrolment a lot of non-taxpayers who may genuinely be better off not saving.

The technology solution would be to enable payroll to be alerted to multi-jobbers using the Government’s Real Time Information. I have asked around and am not sure whether RTI is capable of flagging multi-jobbers (purely at a technical level). There are also questions of confidentiality (do you want your bosses knowing you are dividing your time between them and others?).

There is an associated issue here, which coincidentally also reared its head again yesterday. It’s the issue of non-tax payers promised a Government incentive for enrolling into a pension and not getting it. This scandal has been going on quite long enough but the Government are still allowing people to enrol into net-pay schemes which only give tax-relief to taxpayers while relief at source schemes are available (which gives an incentive equivalent to tax-relief regardless of whether you are paying tax or not).

As many as 900,000 may be paying into a pension without getting tax relief and they’re all the kind of people with small earnings who would be impacted by changes in the auto-enrolment pension trigger.

In the House of Ladies, Baroness Neville Rolfe replied to Baroness Altmann

“The government appreciates the impacts on low paid workers whose employers use a net pay arrangement pension scheme. However, it has not been possible to identify any straightforward or proportionate means to align the effects of the net pay and relief at source mechanisms more closely for this population.”

I am quoted in Pensions Age with a recommendation to Government

Try harder

Though we have clashed on these pages yesterday, I am pleased that Ros and I remain as one on this!  There is more that joins us than divides us!


No one gets left behind.

One thing that is for sure, the solutions to these problems do not rest with Government alone. The Net-Pay scandal is a problem for the occupational pension industry, especially its administrators who have not got the systems and processes in place to manage relief at source.

The problems of multi-jobbers are issues for HMRC and payroll to resolve. Ironically, “income follows member” is a cinch compared with “pot follows member”, if the Government have the will to make the Pension Dashboard happen, I don’t think it’s beyond them to sort out these wrinkles.

If you are coming to the Sage Summit, I will be chairing the pension sessions this afternoon (and tomorrow afternoon) and look forward to seeing you there!

multi-jobber

multi-jobbing

 


Articles referred to in this blog

Jack Gilbert and Citywire with the Pension Minister

http://citywire.co.uk/new-model-adviser/news/dwp-to-tackle-earnings-trigger-anomaly-in-ae-review/a1005961?ref=new-model-adviser-todays-news-list


Natalie Tuck and Pensions Age on the net-pay / relief at source issue

http://www.pensionsage.com/pa/Not-possible-to-resolve-AE-tax-relief-issue-for-low-earners-govt-says.php


About henry tapper

Founder of the Pension PlayPen, Director of First Actuarial, partner of Stella, father of Olly . I am the Pension Plowman
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