Low earners risk being cut out of auto-enrolment depending on the way their pension contributions are calculated and more must be done to help small employers choose the right schemes, the pensions minister has said.
Speaking the Trades Union Congress (TUC) pension conference, Ros Altmann explained employees on low incomes could lose as much as 20% to 25% in tax relief on their contributions depending on how their funds are set up. She explained low earners could lose up to a quarter on their tax relief entitlement if their contributions were calculated on 'net pay arrangements' where gross contributions are deducted from pre-tax pay. This compares with the 'relief at source' method where net contributions are deducted from post-tax pay. One advantage of relief at source is that low earners, ev...
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