UK temporary workers ‘under-enrolled’ in pension schemes

According to the report from the Resolution Foundation, the ‘under-enrolment’ is particularly acute among minimum-wage workers

More than 800,000 workers in the UK are being ‘under-enrolled’ in company pension schemes by receiving less than the minimum legal contributions, or no contributions at all, according to research from the Resolution Foundation. This ‘under-enrolment’ was found to be particularly acute among agency staff and minimum-wage workers.

The latest report, ‘Enrol up!’ from the Foundation’s ongoing investment into labour market enforcement, supported by Unbound Philanthropy, considers the extent of non-compliance with auto-enrolment, and whether there are ‘under-enrolment’ hotspots that require closer scrutiny.

The report notes that overall auto-enrolment has been a success, with over ten million employees joining company schemes since 2012. It adds that compliance activity, led by The Pension Regulator, has been relatively light-touch to date, with fines used sparingly, creating little hard financial incentive for firms to comply

However, the report noted that more than 800,000 employees overall are currently ‘under-enrolled’, either by not being enrolled at all (3.1% of employees), or by receiving less than the legal minimum contributions (up to 1.7% of those who have been enrolled). Under-enrolment is particularly prevalent in areas of the labour market that are hotspots for other labour market violations, such as a lack of paid holiday, and minimum wage non-compliance.

The report notes that while 2.9% of permanent employees have not been enrolled, this rises to 10.5% among agency workers, 7.4% among temporary workers and 8.6% among workers earning within 5 pence of the National Living Wage. The Foundation said these groups are also more likely than average to be short-changed even when they are enrolled.

The Foundation notes that the short-term nature of much agency and temporary work may make it harder to auto-enrol staff, but added that they are no less deserving of employer pension contributions.

According to the Resolution Foundation, The Pensions Regulator should build on the success of auto-enrolment by upping its compliance activities. This should include proactively targeting sectors of the economy where non-compliance is most common, such as employment agencies and in the hotels and restaurants sector.  It warns that the weakness of the labour market in the wake of the current crisis risks leading to greater non-compliance. It also calls on more collaboration with other enforcement agencies.