Uncovering the profile of low earners in the UK and the potential for pension saving through automatic enrolment

In the realm of pensions policy, there exists a significant knowledge gap when it comes to understanding and addressing the needs of low earners in the United Kingdom. While various segments of the population have been subject to extensive research, individuals with low incomes who are still engaged in employment have remained relatively understudied. This group represents a complex demographic, comprising diverse subgroups, who may be earning modest incomes for varying reasons and circumstances. 

The PLSA commissioned the Pensions Policy Institute (PPI) to look into the issue of low earners with the aim of investigating whether automatic enrolment could provide a way of improving their retirement outcomes. Our research is focused on the low earners who earn below £10,000 which means that they are not currently automatically enrolled into employer’s workplace pension schemes. This affects around one in nine employees, equivalent to 3.17 million employees in 2022, who meet the age criteria for automatic enrolment but earn less than the trigger income of £10,000 a year. 

The research reveals the profiles of low earners who earn less than £10,000 and explores the potential merits of integrating this population into pension saving through the mechanism of auto enrolment. All factors need to be considered in the design of policies aimed at improving retirement outcomes.