Low-paid less likely in scheme

Low-paid workers are less likely to be in pension scheme

Workers on low earnings are far less likely to belong to a company pension scheme than higher-paid employees, official figures have showed.

Only 21% of men and 32% of women earning less than £300 a week before tax were saving for retirement through an employer-sponsored pension scheme during 2008, according to the Office for National Statistics.

But the level of pension take-up soared among higher earners, with 76% of men and 82% of women earning more than £600 a week belonging to their work-based scheme.

The ONS said women are more likely to belong to a pension scheme than men across all earnings bands, probably because a higher proportion of women than men are employed in the public sector, where take-up of employer pension schemes is higher than in the private sector.

Overall, the research found that 1.7 million men had full-time jobs that paid less than £300 a week, 79% of whom had not joined their employer's pension scheme.

Around 1.9 million women also earned less than £300 a week, 68% of whom were not saving for their retirement through a company pension.

New measures will come into force in 2012 to encourage all workers, particularly those on low incomes, to save for their retirement by automatically enrolling people into workplace pension schemes, although they will still be able to opt out.

Employers will also have to contribute at least 3% of staff's pay to a pension, with individuals paying in 4% and the Government adding 1%.

Figures released by the Association of British Insurers showed people were shunning pension schemes in the face of the current economic uncertainty and stock market volatility.

The amount of money people saved on a regular basis into personal pensions held with insurance companies dropped by 11% during the first quarter of the year to £751 million, the lowest level since the third quarter of 2006.