Normalising pension saving for everyone


The TUC is publishing this morning important research into inclusion. Since our new pensions minister has included “inclusion” in his title, I hope he is reading it!

Six in 10 workers in the UK agriculture and hospitality sectors are not saving into a workplace pension, according to new research which has sparked fresh calls for ministers to act.

The research … found 908,000 of those working in hospitality, such as pubs, clubs and hotels, were not enrolled in a company retirement fund — equivalent to 59 per cent of the sector’s workforce. (Jo Cumbo -FT)

The numbers need a little understanding. Many of the 908,000 will be working part time and have full time jobs elsewhere, many are students who are typically outside the auto-enrolment wage bands and there are many workers who are migrant from aboard and not properly part of our national labour force.

Which points to a larger question. Do we consider being part of a workplace pension a condition of work?

The gathered consensus

The ipsos Mori research published earlier this autumn suggests that we do. 73% of a large survey of low-paid employees said that being in a pension scheme was now normal, very nearly 70% were looking forward to being nudged into higher contributions. Considering the very large numbers of don’t know/don’t cares in any survey, these show considerable support among those most financially vulnerable – to paying money towards their own retirement.

It is very good to see the TUC promoting the need to include these people into workplace pensions. It demonstrates a degree of support from all parts of the labour market for greater self-reliance. This is not me making a political point, it is me observing that there is now general trust in UK financial services to deliver good outcomes for those with the least to contribute. Credit where credit is due, as a result of better industry practice and Government intervention, the TUC is countenancing using the private sector as the means to baluster the welfare state.  Guy Opperman – please take note.

We are used to a war between our major political parties on policy matters. But no such war exists within pension policy. Indeed, I have been in a room and heard Carolyn Fairburn of the CBI speak with feeling of her admiration for the work of Frances O’Grady of the TUC. Not only is there considerably less friction in Westminster, there is considerably less friction on policy matters such as this, within the representatives of worker and employer rights.agriculture 3

The auto-enrolment review

We are weeks if not days away from the publication of the Government’s auto-enrolment review. Last week, at his one appearance at the Conservative Party Conference, our Pension Minister, Guy Opperman, spelt out his support for greater inclusion in auto-enrolment. There has never been a time of such political and social consensus. Now is the time to extend the scope of auto-enrolment to embrace the young, those with small earnings and the workers who are excluded through self-employment.

Normalising pensions

I am not a fan of compulsory private pensions, we have compulsory national insurance which is a lever for Government to improve state pensions through the national insurance rate.

I am a big fan of inclusion, but it has to be voluntary inclusion, at least in as much as people need the right to say “no” (and opt-out or cessate). That is why I think auto-enrolment is the right policy for Britain (pace David Harris)

I don’t think we should try and second guess those who work in the hospitality industry. There are some genuinely low earners who some would have paying off debt rather than saving. Inclusion would require a few migrant workers to have small orphaned pots when they return to their countries of origin, and there will be quite a few in this group who will opt-out having no reason to be saving (and knowing it). But none of this is good reason not to include the bulk of this group in the “saving habit”.

A nation proud to save!

Blimey, I seem to be writing Guy Opperman’s headlines for him! Actually, I think this headline is the political equivalent in my own “restoring confidence in pensions”. Saving is a habit- a good habit – like going to the gym, not picking one’s nose and saying “thank you”. It is just good manners.

People who don’t save are not quite part of society and should be aspiring to save because it is the grown up thing to (like not picking your nose).

We are getting to a point where we have savings vehicles which are fit for purpose. We are beginning to think about the spending equivalents in our new “post annuity” world.

We have 9m people who are new-savers and we have very few employers who are deliberately non-compliant in helping them to do so. We have payroll organisations like Sage who are looking at how to help things stay this way. The nay-sayers like the IOD have piped down. There is a consensus that saving into workplace pensions is a good thing.

So I hope that if you are reading this Mr Minister, you will have the courage to listen to the numbers from the TUC and that you will have the courage to use the auto-enrolment review to extend the scope of auto-enrolment.

For this is the best chance the Government may ever get.

agriculture 2


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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5 Responses to Normalising pension saving for everyone

  1. John Mather says:

    It’s not just the number saving but how much they save in a recent FT article it was suggested that 18% of earnings is required in its report, the ILCUK noted that only 12.4 per cent of people in the UK are currently saving more than 15 per cent of their earnings for retirement, leaving the majority of people in poor standing to achieve an adequate retirement income.
    It is criminal to misinformation the majority that making a contribution is enough

  2. Adrian Boulding says:

    The Pensions Minister should get rid of the £5876 lower limit of qualifying earnings and make all earnings from the first pound of pay upwards pensionable

    That, together with removing the £10k eligibility threshold would be a big help to part time employees, many of whom have more than one part time job!

    • Phil Castle says:

      I agree. My son is 25 and now works with me at our family IFA. He’s nearly finished his Level 4 and whilst he has already started advising on protection (and is qualified to advise on mortgages, but we both dislike arranging them), he has many friends who do multiple part time jobs and between them they earn a decent level of income, but are missing out on employer contributions.

      Last week he came across one of his friends who he has advised on Life/CIC cover and introduced to another broker whose arranged his mortgage who we discovered his major local employer had told NOT to enter the auto enrolment scheme and instead buy a house.

      In my opinion (and my sons), the two are not mutually exclusive, especially when invariably where a deposit is needed for house purchase it comes from family as it is very difficult to save up a deposit when you are already renting and have a young family. Family members are usually willing to help witha deposit and the fact the “child” has saved less in deposit, but instaed contributed to their pension is seen as a positive rather than a negative.

      Whilst if I coudl turn back the clock I would not have launched LISAs, they are here now and as an adviser, we do have do have to build the LISAs and contrast that with the need for a pension in our discussions, but as invariably people don’t have a big enough deposit, the conversation is often leaning towards the “child” entering the pension by auto enrolment and saving less of a deposit and the parent rewarding them by helping fund their LISA.

  3. henry tapper says:

    Agreed! Add to this a better definition of “worker” that includes those who are involuntarily self-employed!

  4. henry tapper says:

    Just re-read your post Phil, the confusion between aspiring to be a house-and pension owner is a tough one for young people. At least you don’t need a deposit to start owning a decent pension. I had not thought of the inter-generational element

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