The government should support the retirement incomes of lower paid workers by concluding the net pay review in this year’s budget, according to Now Pensions.

Chancellor Rishi Sunak’s Spring 2020 Budget, released on 11 March last year, had stated that the government would “shortly publish a call for evidence on pensions tax relief administration” following the inclusion of plans for a comprehensive review of issues caused by the anomaly in the Conservative Party’s 2019 election manifesto.

However, this review was paused in July 2020 due to the impact of the Covid-19 pandemic.

Now Pensions director of policy, Adrian Boulding, said: “The government committed to look at this in last year’s Budget and we now need to see action to help the lowest earners get better value for money on their pensions.”

He added that Now Pensions’ research showed “the lowest income earners are missing out on up to £111m of government tax relief every year” and explained that the issue affected “workers who are auto enrolled into a net pay pension scheme because they earn more than £10,000 per year but are under the income tax threshold, currently £12,500”.

Boulding continued: “It affects more than a million people’s take-home pay, reducing it by up to £64 a year. It’s estimated that 75 per cent of the people impacted are women in low-paid and part-time jobs.

"Women often work part-time in order to work around other duties such as childcare and this has been exacerbated over the past year of lockdowns.

“Now Pensions is the only net pay scheme to offer to top up the pension pots of its non-income tax paying members, but that isn’t a long-term solution. We are calling on the government to conclude their review at this year’s Budget.”

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