Report highlights pension gap for people with disabilities

People with disabilities are missing out on pension savings, according to a new report.

Serious pensioner stares into the distance


People with disabilities face huge barriers to pensions saving, resulting in a private pension pot just 36% of the UK average, according to new research.

The research by the Pensions Policy Institute (PPI) reveals that people with a disability who are approaching retirement age (age 60-64) have £47,980 average pension wealth compared to the average UK pot size of £130,928, a difference of almost £83,000.

The PPI estimates there are currently, just over four million disabled workers  in the UK, but that there is still a high level of unemployment among disabled people. They are more than twice as likely to be unemployed as non-disabled people and even those who can work are often limited by the amount and type of work they can do and can be trapped in low-paying or part-time jobs.

Almost a third of people with disabilities work part time (28%) compared to the non-disabled population of 20%. The issue with working part time is that workers might not meet the minimum earnings threshold of £10,000. Even those earning more than the £10,000 threshold in a job and enrolled still miss out on potentially significant contributions from each of their employments due to the Lower Earnings Limit. The lower limit is set at £6,240 meaning that only earnings over that amount are pensionable. Instead of saving 8% into a pension, those earning £10,000 are only contributing 3.8% of that total figure, meaning they are missing out on crucial employer contributions.

The PPI says 83% of eligible disabled workers participate in auto enrolment schemes compared to 80% of non-disabled eligible employees. However, because they’re less likely to meet the qualifying criteria (approximately 15% don’t qualify) as a group they still benefit less overall from automatic enrolment compared to non-disabled people.

They also typically have more expenses than non-disabled people. According to the charity Scope, life costs you on average £583 more a month if you’re disabled and families of disabled children face, on average, extra costs of £581 a month. For almost a quarter (24%) of families with disabled children, extra costs amount to over £1,000 a month. This means there is even less chance for them to save.

Joanne Segars, Chair of Trustees at NOW: Pensions, says: “People with disabilities are one of the underpensioned groups that we have been campaigning on behalf of for some time. We believe it is imperative that we continue to raise awareness of the discrimination that many people go through which has a huge impact on the ability of people to save for their later life. We want to make pension saving fairer for everybody in the UK and our policy proposal to remove the £10,000 earnings threshold would help get a further 500,000 disabled people saving for their retirement.”

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