Part timers and pensions

The Government argues that under their proposals only those earning over £18,000 will bear the full brunt of the increase in pension contributions and those earning under £15,000 won’t pay any of the increase in contributions.

In a briefing issued ahead of a speech on pensions by Danny Alexander, Chief Secretary to the Treasury it was made clear that the figures above were based on ‘full time equivalent’ salaries.

The ‘full time equivalent’ point is important because many low-paid staff in the public sector earn over the £15,000 threshold if they worked full time, but they have low take home pay because they work part-time. So someone who works in a job which if full-time meant they would earn £16,000 a year, but actually works half-time and thus earns £8,000 will not be protected from the increase.

In the Cabinet Office’s document on pension contributions it gives the following example:

Jayne works part-time – 3 days a week. Her actual salary is £12,000. Jayne will pay additional contributions on £12,000 but at the rate which applies to a salary of £20,000 (Jayne’s full-time equivalent rate)

Whilst we all are getting a raw deal from the increases in contributions, part timers suffer in particular. Given that the great majority of part timers are women then what we are really saying is that women will be particularly hit

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