[2018] ** Motion 31 Auto-enrolment and the lowest paid

carried motion
Carried motion

Received from:

Congress acknowledges that a major incentive for workers to save for retirement is the tax relief they receive on their pension contributions.

Everyone who saves into a pension is entitled to a government ‘top up’ of at least 20 per cent, whether they are a taxpayer or not. However, due to a tax loophole, thousands of the lowest paid workers are not benefitting from this and they, and often their employers, don’t even know it.

As auto-enrolment contributions increase and personal tax thresholds rise, the number of people losing out and the scale of their loss will keep growing.

There are two types of scheme employers can choose to meet their auto-enrolment obligations. One type is called a Tax Relief at Source Scheme (TRS); the other is a Net Pay Scheme (NPS).

With a TRS scheme everyone enrolled gets tax relief on their contributions regardless of their income. However, non-taxpayers in an NPS scheme don’t and
they miss out on the government top up. This significantly reduces the value of their pension pot.

Industry experts have highlighted this injustice to the UK government but it has done nothing to address it. It continues to encourage the lowest paid to save for their retirement while denying them tax incentives.

Congress calls on the General Council to raise awareness of this issue with workers and employers so they can put pressure on government to close the loophole and pay those on lower incomes the tax relief they are due.



  • Add new final paragraph:
    “Congress also recognises that for millions of workers, current pension provision from their employer is wholly inadequate. While DB schemes remain the gold
    standard, Congress supports the introduction of CDC as an alternative to DC provision and calls for the government to permit CDC schemes in the UK.”

Communication Workers Union