An “under the radar” campaign to make workers wait a year before employers have to make compulsory contributions to staff pensions would deprive one in six workers at any one time in Scotland of a chance to build up a pension, according to STUC research published today (Thurs).
The Government’s Pensions White Paper backed the Turner Commission’s proposal that employers should pay three per cent of an employee’s wage into a National Pensions Savings Scheme unless the employee opts out, despite opposition from many employer groups.
The STUC has learnt that some major employers, particularly in retail and hospitality, are lobbying ministers to introduce a waiting period of a year before an employee in a new job starts to gain from compulsory employer pension contributions.
But a new STUC analysis of official statistics shows that if successful this would mean that on any day a third of a million employees in Scotland - one in six (16.9 per cent) of the workforce - would be missing out on a pensions contribution. Workers who frequently change jobs, as is common in some sectors, would therefore receive a significant reduction in pension contributions over their working lives.
Ian Tasker, STUC Assistant Secretary said
“This attack on the proposed National Pensions Savings Scheme is an absolute disgrace and the latest attempt by business organisations to avoid making provision for their low paid workers, many of them in insecure employment while the bulk of their members make substantial contributions to their own schemes”.
“This is downright hypocrisy when you consider that all those workers the employers want to exploit are the same workers who earn the profits and dividends for business owners and directors”.
“The figures show that 16% of Scotland’s lowest paid and insecure workers will be the losers if the Government falls for this nonsense. We would encourage the Government to stand firm and ensure that workers can build up a NPSS form day one of employment and transfer their savings from employer to employer”.
“The employers through failing to make voluntary contributions wrecked the stakeholder pension scheme, turning it into a savings scheme for children and spouses of the rich. They cannot be allowed to wreck this very welcome proposal by the Government to improve retirement provision for all Scottish workers”.
Among groups who are least likely to have an existing pension the proportion who would miss out is higher. And these are precisely the target group for the National Pensions Savings Scheme.
More than one in three (36.2 per cent) workers in the hotel and restaurant sector across the UK have not been in their jobs for a year. Nine out of ten workers (90.1 per cent) in this sector do not have a pension (other than state provision). In retail more than one in five (22.1 per cent) have not been in their job for a year. Across this sector nearly seven out of ten (68.3 per cent) do not have a pension.
A 12 month waiting period would particularly hit black and Asian workers. Nearly one in four (23.5 per cent) Asian workers have been in their jobs for less than a year as have one in five black workers (20.4 per cent) compared to 17.2 per cent of white workers.
London would be worst hit with 18.9 per cent of its workers (more than half a million) missing out on pension contributions, compared to Northern Ireland where only 14.2 per cent have been in their job for less than a year.
TUC General Secretary Brendan Barber, said: “The Government was right to face down the employer organisations who opposed compulsory pension contributions. But some are now engaged in a last minute under the radar attempt to rip the guts out of the new pensions system by making staff wait for a year in every new job before they start to build up a pension.
“This might not make a big difference to someone who only has one or two employers in their lifetime, but that has always been rare. And those who most need the new pensions system - those in lower paid and less secure jobs - will be the biggest losers.
“The new National Pensions Savings Scheme is not just a modest scheme to encourage a few people to save a bit more, but a pillar of the new pensions settlement. Bosses don’t get a year off before they pay the National Insurance contributions that help pay for state pensions and they should not get a holiday before they pay compulsory contributions into work pensions either.”
Figures for employees in their job for less than a year, including break downs by gender, ethnicity, region and sector, are available in table format at: http://www.tuc.org.uk/extras/pensionsdelay.doc
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