TUC bemoans 'stealth pensions opt-out' by employers

31-08-2006

Millions of British workers could be in danger of missing out on a practical pension by the time they reach retirement age thanks to a potential loophole in the proposed system, the TUC union has said.

The union claims that businesses, particularly in the hospitality and retail industries, are lobbying the government to delay their own contributions to employee pension schemes until workers have completed one year of service.

Under proposals unveiled in the government's high-profile pensions white paper earlier this year, employers are required to pay three per cent of workers' salaries into the national pensions savings scheme.

But the TUC warns that for about one in six workers, this would make it practically impossible to develop a sizeable pension.

This is because employees in certain industries frequently change jobs, the union says, with 4.3 million workers at current levels not having been working for their current employers for more than a year.

The TUC says that one-third of hotel and restaurant workers spend less than 12 months working for any given employer, while for employees in the retail sector the proportion is one-fifth.

Brendan Barber, general secretary of the union, today said: "The government was right to face down the employer organisations who opposed compulsory pension contributions. But some are now engaged in a last minute, under the radar attempt to rip the guts out of the new pensions system by making staff wait for a year in every new job before they start to build up a pension.

"This might not make a big difference to someone who only has one or two employers in their lifetime, but that has always been rare. And those who most need the new pensions system - those in lower paid and less secure jobs - will be the biggest losers."

Today's research also warns that workers in London and those from ethnic minorities are most in danger at being denied a pension.


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