DWP pension changes planned for women, young people and low earners

Pensions for women, young people and low earns could be improved under changes being considered by the government. A Department for Work and Pensions (DWP) spokesperson indicated it hopes to abolish the lower earnings limit and reduce the age for automatic enrolment.

Automatic enrolment was brought in to help women and other groups - like young people and lower earners - who "historically have been less well served by the pensions market." The government spokesperson said its "ambition" is to make the changes, which would "improve financial resilience in later life for these groups", reports Hull Live.

It comes as a report by Scottish Widows found four in 10 single mothers say they are not a member of a pension, compared with around three in 10 (29%) women generally. The life insurance and pensions company said nearly three-quarters (72%) of single mothers are concerned about running out of money in retirement, as are 61% of women generally and around half (52%) of men.

The report said lone parent households with dependent children have £29,000 of assets on average - covering all wealth, including pensions - compared with more than £275,000 for the average couple with dependent children. This amounts to a wealth gap of almost a quarter of a million pounds between the groups, according to the finding based on a survey of more than 5,000 people across the UK and Office for National Statistics (ONS) figures.

Scottish Widows managing director of workplace savings Jackie Leiper said: "Current economic conditions are making it harder than ever to fix the deep inequalities that underlie the pensions gap, with the retirement savings of women deeply impacted by key life events such as divorce or motherhood. Providers, regulators and employers must collaborate urgently to address this crisis – from reconsidering the auto-enrolment threshold to far greater investment in childcare support – to help the most vulnerable in the near-term."

Phil Brown, director of policy at B&CE, provider of the People’s Pension, also called for automatic enrolment changes, saying: "The gender pensions gap isn’t going to close itself and is likely to widen, unless policymakers make it easier for women, especially mothers, to return to the workplace. This will only happen if there is better access to affordable, good quality childcare, as well as automatic enrolment reform."

The DWP spokesperson said: “Automatic enrolment (AE) has helped more women save into a pension, with participation rates for women catching up with those for men. In 2021, 87% of eligible women working in the private sector were participating in a workplace pension, up from 40% in 2012.

“AE was designed specifically to help women and other groups such as young people, and lower earners, who historically have been poorly or less well served by the pensions market. The Government’s ambition for the future of automatic enrolment is to abolish the lower earnings limit and reduce the age for being automatically enrolled to 18, which will improve financial resilience in later life for women and these groups."

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