Martin Lewis gives advice on auto-enrolment pensions
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New research has found people with disabilities face huge barriers to pension saving, damaging retirement potential. Britons living with a disability have a private pension pot just 36 percent of the UK average, according to the study commissioned by NOW: Pensions.
While the average UK pot size is £130,928, people with a disability aged 60 to 64 have an average of £47,980 put away.
People with disabilities may have to adjust their working arrangements, as they can be limited by the amount and type of work they can do.
Some will have dropped down to part-time work which could impact eligibility for automatic enrolment.
Other individuals are unable to work at all, drastically affecting their retirement savings.
This is the case for Linda, who currently lives with Multiple Sclerosis (MS) after being diagnosed in 2019.
The lifelong condition involves the immune system mistakenly attacking the brain and nerves, which can create serious health issues as a result.
Linda said: “Since my diagnosis, I’ve had to reduce my hours twice – going from full time to just 24 hours a week.
“As Multiple Sclerosis is a degenerative illness, there may be a time where I have to give up work completely.
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“Given the huge rise in energy prices and cost of living, I’m very concerned about what that could mean for me when I reach retirement and whether I’ll have the pension I need.”
Since reducing her hours, Julia explained her monthly pension contributions have got smaller.
With financial pressures in the here and now, she is even considering opting out of her pension altogether.
This is not a step Linda wants to take, however, she explains she needs to have enough money to live on.
She continued: “I’m due to retire in the next eight to 10 years. The thought of being forced to opt out of my workplace pension makes me anxious about how I’ll afford to live in retirement.”
Part-time work means disabled Britons may not meet the minimum earnings threshold of £10,000 for auto-enrolment into a workplace pension.
Even those earning more than the £10,000 threshold in a job and enrolled still miss out on potentially significant contributions from each of their employments due to the Lower Earnings Limit.
This is set at £6,240, meaning only earnings over that amount are pensionable.
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NOW: Pensions is therefore calling upon the Government to remove the £10,000 auto-enrolment trigger to get more people saving into workplace pensions.
The organisation states by doing so, a further 500,000 disabled people would save into a pension.
Joanne Segars OBE, Chair of Trustees at NOW: Pensions, said: “People with disabilities are one of the underpensioned groups that we have been campaigning on behalf of for some time. We believe it is imperative that we continue to raise awareness of the discrimination that many people go through which has a huge impact on the ability of people to save for their later life.”
A Government spokesperson told Express.co.uk: “The number of disabled people in employment has increased by 1.3 million since 2017 and over the next three years we will invest £1.3billion in employment support for disabled people and people with health conditions.
“Alongside this, Automatic Enrolment has helped millions more people save into a pension, with participation among eligible people with a disability rising from 53 percent in 2012/13 to 88 percent in 2019/20.
“Our plans to remove the Lower Earnings Limit for contributions and to reduce the eligible age of being automatically enrolled to 18 in the mid-2020s will enable even more people to save more and start saving earlier.”
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