What do the pension auto-enrolment changes mean for women?

Kate Palmer from Peninsula outlines how the latest changes in pension auto-enrolment might affect women.

Mature woman at work


Since auto-enrolment was introduced in 2012 as a way of encouraging working individuals to save for their retirement costs, the amount of contributions has increased on a phased approach. The 6th April 2019 saw the last planned increase take effect, with employers now responsible for contributing 3% and employee’s mandatory contribution increasing from 3% to 5% of earnings.

Less take home pay

As the pension contribution is taken out of wages before they reach an employee’s pocket, take home pay will be affected by the higher contribution amounts. As a common feature of the labour market is that women are more likely to work in part-time or lower paid roles which typically only provide the minimum wage, such as the care sector, this greater chunk of money being taken from wages can have a serious impact on their ability to manage household budgets and outgoings. Women may be in a position where they have to weigh up or make changes to their monthly costs in order to finance their pension pot.

Opting out

There is the ability to opt out of auto-enrolment pension schemes, although any individual who remains eligible will be automatically opted back in every three years. Opting out or remaining in the scheme is a decision that needs to be made by each individual, although employers can provide help and guidance on pensions to help women make this decision and understand any long-term financial implications.

Opting in

Although the contribution has increased, there any many women who do not get automatically enrolled into a pension because they fail to meet the annual earnings limit of £10,000, whether because of their low pay or due to their working arrangements which are scheduled around personal requirements, such as child or dependent care. There is the option to opt-in even if an employee doesn’t meet the eligibility criteria. However, their employer will not always be bound by the same obligations to contribute.

Again, employers should let their staff know about their right to opt-in, how to do this and what this means for their pension contributions. The government had pledged to make changes to auto-enrolment by the mid-2020s to start pension contributions from the first pound earned by workers. Introducing this change will be beneficial for flexible and low-paid female workers, as well as those undertaking gig or short-term contractual work.


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