Employees with multiple jobs that miss out on auto-enrolment because they earn less than the £10,000 qualifying threshold in each job are collectively missing out on £90m of employer contributions a year, new research has found.

Publishing its 14th annual Scottish Widows Retirement Report, the provider said that those with multiple jobs are often working full-time hours, and are unfairly missing out on pension contributions due to their total earnings being split across different employers.

Using the latest figures from the Office for National Statistics, Scottish Widows projected that 1,831,127 multi-jobbers have at least one job that earns under £10,000 and is not enrolled in the company’s pension scheme. Based on the average salary from these jobs, collectively over £90m of employer contributions a year could be claimed if the auto-enrolment threshold was scrapped.

On a more positive note, the survey found that more young people are saving for retirement. The number of under-30s saving for retirement has increased by 9 per cent. Two in five UK workers (39 per cent) aged 22-29 years old are now saving adequately for retirement, up from 30 per cent last year. Despite this, more than one in five young people (21 per cent) are still saving nothing for later life, with a further 20 per cent saving seriously less than 12 per cent of their income, the minimum amount recommended by Scottish Widows.

Commenting, Scottish Widows retirement expert Robert Cochran said that it is “encouraging” that more young people are saving enough for a decent retirement and auto-enrolment has played a really important part.

“However, auto-enrolment was designed as a safety net for a country facing a pensions crisis. This year’s study shows some of the hardest working and most financially vulnerable members of society are slipping through the auto-enrolment net because of minimum earnings thresholds. This unfairly impacts multi-jobbers, who could be working the equivalent of full-time hours, yet without the financial benefit of having a single employer.”

Furthermore, the research revealed that savings levels have stagnated across the rest of the working population. At 55 per cent, the proportion of UK workers saving adequately for retirement has dropped slightly for the first time since 2013, falling from 56 per cent, the prevailing rate for the last few years. Despite adequate savings rates having risen by 10 per cent since auto-enrolment was introduced in 2012, the stall in recent years demonstrates that a renewed effort is needed to improve the nation’s readiness for retirement.

Cochran said: “The fact that savings levels have stagnated for the last few years shows that auto-enrolment is not a silver bullet. It will be interesting to see if the step up in minimum contributions helps reverse this trend, but it doesn’t take away from the fact that the current threshold puts an unfair barrier in the way of low-paid workers and their ability to prepare adequately for retirement. We want to see it scrapped entirely to let all workers benefit from employer contributions. It’s vital that every single person in the UK is prepared for the rising costs of retirement, and removing the threshold can help to do that.

“This evidence underscores our continued campaign to make pensions more inclusive for low earners. It’s a thorny issue but only by tackling it will the lowest paid segments of the workforce have a fair chance of kick-starting their later life savings with support from their employers.”

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