An ‘under the radar’ campaign to force workers to wait a year before employers make compulsory contributions to staff pensions would deprive many employees of the chance to build up a pension, the TUC has warned.
The government’s Pensions White Paper proposes that employers should pay 3% of an employee’s wage into a National Pensions Savings Scheme unless the employee opts out.
The TUC has learned 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 TUC analysis of official statistics shows that, if successful, this would mean that on any day, one in six workers – about 4.3 million people – 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, the union group warns.
The TUC said more than a third of workers in the hotel and restaurant sector have not been in their jobs for a year. In retail, more than one in five have not been in their job for a year.
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.”
Firms don’t get a year off before paying National Insurance contributions, so they should not get a payment holiday on pension contributions either, Barber said.