Why job – splitters can get shafted on pensions.


I was woken early in the morning to the sound of Robert Cochran, the familiar voice of Scottish Widows pensions team.

Scottish Widows have done some research that £90m a year is being saved by employers/lost to employees as a result of job-splitting.

The research also shows that nearly two million ‘multi-jobbers’ – people with more than one job – are missing out on over £90 million a year in employer contributions because of the policy on auto-enrolment thresholds. Multi-jobbers, who are often working full-time hours, are unfairly missing out on pension contributions for their overall earnings due to their income being split across different employers, thus falling foul of minimum earnings threshold for enrolment.

Scottish Widows projections, using the latest ONS figures, show that 1,831,127 multi-jobbers have at least one job that earns under £10,000 and is not enrolled in the company’s pension scheme. Based on the average salary from these jobs, collectively over £90 million of employer contributions a year could be claimed if the auto-enrolment threshold was scrapped.  From the Scottish Widows  press- release.

The problem’s simple, earn £9.5k at employer A and £9.5k at employer B – employer responsibility to enrol you in a pension and contribute 2% – zero.

Earn £19k with one employer – employer responsibility is to enrol you in the workplace pension and pay 2% over the lower threshold (£6032). The amounts leap 50% in 2019 when contributions increase by 50% to 3% pa

In this case the job splitting employee is missing out on over £260 pa of pension contributions.

Does this matter?

As with the net-pay scandal, it is the low-earners who are at risk of being shafted. Typically people who get what work they can through agencies; typically people with low levels of financial awareness who are least valued by employers.

If we want to look at examples of financial exclusion, here is one. What’s more, with the wafer thin margins of firms offering facilities management, catering and accommodation – as examples;- the temptation to unofficially cap earnings below the minimum auto-enrolment threshold, is obvious.

Does this happen?

I’m off on the riverboat to Chelsea Harbour in a few minutes, there to discuss auto-enrolment with the Pensions Regulator and a few hundred payroll and reward specialists. I’m going to be asking the audience!

If a Reward strategy can save 2% of the non-strategic wage bill by limiting hours, why shouldn’t employers exploit this gap in the legislation? If employers can legally evade AE contributions and stay solvent, who is the Regulator to stop them?

Can this be stopped?

Of course it can. It is simply a matter of interrogating the HMRC’s RTI data and identifying workers whose total earning exceed £10k pa and issuing an AE pensions bill to employers who have not previously been aware of job-splitting among their staff.

There is of course a much wider set of work related benefits. Universal Credit does use aggregated pay to determine financial support, as Kate Upcraft points out in comments below.

Kate also makes some pertinent comments on the extra obligations on employers of increasing the scope of AE in the way Scottish Widows are advocating.Should compensation be retrospective?

Not unless some lawyer (as bright and diligent as Tristan Mander) , can show that there was a duty on employers paying part of a total earnings over £10k, to pension their portion.

I find it highly unlikely that this could be enforced, even if found to be a duty; in all the talks from the Pensions Regulator I have (half) listened to, since 2012, I have not heard this duty mentioned.

Nor did this matter get a mention in the recent auto-enrolment review.

Should the Government act?

Yes it should. Well done Scottish Widows, for bringing this elephant to visibility. We have all sensed this problem and probably put it on our list to ask the Regulator. I am sure that my friend Kate Upcraft has done a lot more than that.

But it takes a big beast like Scottish Widows to get this issue on the radio, and get it onto the Government’s radar. Guy Opperman, who had a spate of public appearances a couple of months ago, has retreated into obscurity again. Perhaps I should start sending him questions like these.

But I suspect that he has a flunky who will give him the research first hand. All I have is a sleepy memory of an early morning conversation, as and when the Scottish Widows research gets published – (can someone send it to me and I’ll integrate it to this blog?)

In the meantime- Neil Esslemont be warned – this issue will be raised this afternoon at the excellent event you and I are speaking at!

If you’re going – come to our breakout. The slides are already published and you can see what a great session it’s going to be, by flicking through this deck.

Tickets still available

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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6 Responses to Why job – splitters can get shafted on pensions.

  1. Adrian Boulding says:

    It is of course also indirect sex discrimination as we know that the majority of the job splitters are women

    Incidentally, even if both the schemes in your example are net pay the job splitter, were they to exercise their statutory right to opt in, would get the full 20% tax relief


  2. henry tapper says:

    I am assuming that RTI tells payroll that there is an income tax liability as soon as aggregate pay exceeds the income tax threshold- in which case this is not a net pay problem – unless the aggregate pay is in the £10-12kpa bracket. There is a separate issue re paying people up to but below the NI threshold. I am told that this is picked up by RTI – but I’d be interested to hear (perhaps today) on how this is working.

  3. henry tapper says:


    The current propensity to have multiple part-time jobs affects all sorts of work-related benefits as these are based on pay subject to NI, ie if I earn on average with Employer A less than £116 per week I can’t get sick pay, maternity pay etc etc which is a lot less than the £192 PW AE threshold.

    The only way to square the circle is via Universal Credit which does use aggregated pay to determine financial support. That of course is quite different to using it to require a pension contribution.

    Why should Employer A or B pay Employer pension contributions for someone who earns less than £10k, a threshold determined as the minimum to make saving sensible rather than using that money to pay off personal debt as below that any saving would reduce future means tested benefits in retirement?

    Taking our church cafe as an example, where I’m payroll manager, in the last two years we’ve had to pay the voluntary living wage (as appropriately dictated by Methodism) of £8.75 ph plus differentials for the two managers, provide a pension to three of the six staff and pay the apprenticeship levy as all Methodist churches have to pay regardless of size.

    Sadly all the part time staff have had to have their hours cut as we will be insolvent soon. So whilst all of these new Employer oncosts are morally appropriate? ultimately our outreach project will fold and all the staff will lose their jobs.

  4. George Kirrin says:

    I hope you raise this in Edinburgh on Tuesday at the ICAS debate, Henry.

  5. henry tapper says:

    Sorry not to have raised it!!

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