Pensions World

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Millions of workers could be put off saving into a pension unless changes are made to auto-enrolment requirements for part time workers, says Bluefin Corporate Consulting.

Official data shows that in the final quarter of 2011 the number of part time workers grew by 60,000 to reach 6.61m in total, and many experts believe this trend will continue in the future. In the past these workers were unlikely to have joined a company pension scheme and although auto-enrolment is aiming to change this, the complexity involved may put part time workers off pensions altogether.   

Robin Hames, head of technical, marketing and research at Bluefin, said: “The government’s aim with auto-enrolment is to get more people, especially lower earners, saving for retirement. Unfortunately, this risks being completely undone by the complexity of the current arrangements. As it stands, part time workers, especially those who work varying hours or do seasonal work, will be hit hardest by these complexities.   

“Take an employee who does different hours at different times, for instance a mum with children who varies her hours to fit round the school holidays. She may go from being a ‘worker without qualifying earnings’, to an ‘other jobholder’, to an ‘eligible jobholder’, and back again – all in the space of a year. This means she would receive multiple pieces of communication from her employer, each with a different message about whether she will be automatically enrolled in a scheme and whether employer contributions will be paid. This will be a nightmare for both employee and employer.  

Mr Hames adds:  “The latest figures from the ONS show that there are record numbers of part time workers in the UK, and likely to be more in the future. The risk is that if they are bombarded by confusing and seemingly contradictory updates every time their status changes, they will simply decide not to bother saving into a pension at all.”  

He concludes: “We are concerned that the government does not appear to appreciate just how many employers and employees this could affect. With deadlines looming, the government is running out of time. It needs to take action now to ensure that the auto-enrolment arrangements are successful at achieving their original objectives.”  

www.bluefingroup.co.uk