Multi-jobbers take heed

Workers with more than one job, earning lower salaries, are at risk of a poorer retirement, as they miss out on employer pension contributions, a new study has found1.

Under the auto enrolment scheme, employers are required to set up a pension and make contributions on their employees’ behalf, unless an employee decides to opt out. Employees need to earn at least £10,000 a year to be automatically enrolled. This is where the issue faced by multi-jobbers becomes clear, as no matter how much someone earns in total, they are excluded from auto enrolment where the individual job pays less than £10,000 p.a. This has been estimated to affect more than four million people in the UK.

Threshold confusion

Many workers are unaware that providing they have qualifying earnings above £6,240, they can choose to opt into their company’s pension scheme, with the employer legally required to contribute at a rate of 3% of their salary. Those earning under £6,240 can still opt into their company pension, but their employer is not required to contribute.

Worryingly, the study found that around one in 20 multi-jobbers, with at least one job paying under the £10,000 threshold, say they have been refused entry into a company pension by their bosses.

1Scottish Widows, 2021

The value of investments and income from them may go down. You may not get back the original amount invested. A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.