The TUC is warning that women on low wages could find themselves locked out of plans to auto enrol workers into pension schemes.
As of October this year all workers for large companies will be auto enrolled into a pension if they are not already a member of a suitable scheme. This will be extended over time to include all workers, the current plan is that this will be in place by April 2017.
Although workers would be enrolled automatically they can elect to opt out if they so wish.
The proposal at present is that all workers who earn more than the tax threshold of Â£7,475 a year will automatically be enrolled into a pension by their employer. Eventually (currently 2018) the employee will contribute 5% of any earnings between Â£5,564 and Â£39,853 and the employer 3%. Pensionable income will include salary, overtime and commission.
But as the lower tax threshold is raised to take lower earners out of paying tax it would also remove auto enrolment so many low earners, mostly women, could find themselves without a pension says the TUC.
A TUC analysis suggests it could affect some two million women and as many as seven million if the lower band and pension auto enrolment trigger rose to Â£10,000.
The TUC would therefore like to see the pension auto enrolment trigger amount disengaged from the lower tax threshold and set so as to capture as many people that could benefit from it as possible.
"Auto-enrolment is a huge advance. But no-one can pretend that contributions are good enough, particularly during the long wait before every company is covered by auto-enrolment and the two years after that before everyone gets their full contribution," said TUC General Secretary Brendan Barber "The government should use its review of the thresholds to widen the earnings band each year by freezing the lower limit, while increasing the upper band limit in line with earnings. This would give a small manageable increase in the earnings band each year. It's the pensions equivalent of fiscal drag – raising more tax by freezing tax thresholds.
In particular we urge the government not to raise the auto-enrolment earnings trigger in line with the income tax threshold, which the coalition is keen to raise to Â£10,000. Whether this is the best way to help the low-paid is an interesting debate, but it would be disastrous if it had the unintended consequence of excluding a significant proportion of women workers from pensions saving."