THERE is a “strong case” for employees to receive a workplace pension, even if they do not pay into it, research has shown.
Following research carried out by the Institute for Fiscal Studies (IFS) with the abrdn Financial Fairness Trust, it proposed that employees be guaranteed a pension contribution of at least 3 per cent of pay.
The scheme would benefit workers who may opt out of the pension scheme or are not enrolled automatically due to low earnings, researchers said, adding that it could be beneficial to women, part-time workers and young adults.
It also suggested that the age for automatic enrolment be widened, starting at 16 instead of 22, to help workers save.
Researchers suggested that increased default employee contributions could be targeted at people on average incomes and above to help others supplement their state pension.
Up to seven million workers in the private sector contributing to defined pension schemes are on course to have incomes that will be too low during retirement, researchers found.
IFS research economist Laurence O’Brien said: “Too many private-sector employees appear on course to end up on a low — or disappointing — retirement income.
“While there is often concern about savers not saving enough, an additional problem is that despite automatic enrolment boosting workplace pension membership, more than one in five private-sector employees are still not saving in a pension.”
IFS senior research economist David Sturrock said: “There is a strong case for almost all employees to receive an employer pension contribution, irrespective of whether they make a contribution themselves.”
But National Pensioners Convention general secretary Jan Shorrt said: “Whilst some of the schemes from the IFS and others may bear merit for low-paid, ethnic communities, women, those with health conditions, disabilities and part-time workers, the real benefit for all workers is to have a decent state pension when they retire.
“To enable individuals to prepare for a decent retirement, the structure of work must change.
“We need to deal with short-term and zero-hours contracts — the precarious nature of work.
“If individuals need flexibility, it is written within the law to enable employers to give it.”