Action is urgently needed on the net pay pension issue


Call to action

Action is required to address a systematic unfairness in the tax system that is disadvantaging many low earners saving for their retirement. 1.7m low earners are potentially affected by this, many of them women, and  it is only right that the Government seeks to address this to ensure the continued success of auto enrolment.

The net pay action group has previously discussed a potential solution to the problem with Treasury officials, and awaits  the outcome of the call for evidence on pensions tax administration. The group hopes that the country will get a response to the consultation  in the Budget and that the Chancellor takes positive action to address the fundamental unfairness that is embedded in our pension system.

The net pay action group continues to engage with politicians across the political spectrum and are heartened by the support that it is receiving to address this issue. It will continue to engage with Parliamentarians and through the media to maintain awareness of this issue and to seek a positive resolution.

Thanks to the SNP’s Neil Gray

Neil Gray’s (SNP W&P spokesperson) asked the Chancellor four questions last week:

  1. what progress his Department has made on responding to its consultation on pensions tax relief administration; and what the timeframe is for publishing a response to that consultation.
  2. what recent assessment he has made of the effect of the administration of pensions tax relief on low-income workers; and if he will make a statement.
  3.  what recent estimate he has made of the number of low-income workers with reduced take-home pay following application of pensions tax relief by pension scheme operators.
  4. whether the Chancellor plans to bring forward legislative proposals to amend net pay pension schemes to ensure that people earning below the personal tax threshold can access their full tax relief.

Not going away

This issue is not going away, it is just as real as it was before the pandemic, if not more real. Those on low pay will be even more in need of income in years to come as analysis of financial deprivation during the pandemic suggests they have suffered most in the past ten months. This is from the Resolution Foundation’s Building a living pension study published this week

The impact of Covid-19 in 2020 has further eroded confidence in pension outcomes. Research carried out for Aviva’s recent Embracing the Age of Ambiguity report revealed that three quarters (78 per cent) of employees feel as if they will have to work longer before they retire. And less than a third (28 per cent) know how much they need to save to fund the lifestyle they want in retirement. So, in this context, there is a clear need for a Living Pension standard to encourage and reward employers going beyond autoenrolment minimums, and reassure employees – particularly those on lower incomes– that their workplace pension is designed to deliver a decent standard of living in retirement.

But this is not an issue that will grab the budget headlines, which is why it is all the more important that pension people get behind it. Let’s hope that the new shadow pension minister.

Let’s hope that Matt Rodda, the new shadow pensions minister . picks up on this.

Matt Rodda

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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2 Responses to Action is urgently needed on the net pay pension issue

  1. Absolutely right Henry, this is a major social injustice which has been going on for years and still remains unaddressed while more and more of our lowest earners keep losing money they would otherwise have every week. Their employer scheme is chosen only by their employer, the low paid workers are put into the scheme and can do nothing to get their overpayments back. Let’s hope the Treasury listens to the suggestions we have made to help reimburse these employees

  2. henry tapper says:

    The point about choice is particularly well made.

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