People with disabilities have a pensions that are worth just a third of the average UK person, which is seriously impacting their retirement plans, according to new research.
Figures from the Pensions Policy Institute show that of those approaching retirement, people with disabilities have an average pension pot of just £47,980, compared to an average pension pot of £130,928 in this 60-64 age group.
The research was commission by Now Pensions as part of a wider campaign to promote fairer pensions savings.
They point out that there are currently over 4 million people in the UK workplace with a disability. However some people with disabilities may be limited to the type of work they can do, or the hours they can work, and this can trap them in lower paid or part-time working, which can impact pension savings.
Almost a third of people with disabilities work part-time (28 per cent) compared to the non-disabled population of 20 per cent. This can impact retirement savings, as part-time workers may not meet the minimum earnings threshold of £10,000, to automatically qualify for AE. Even those earning above this may still miss out on potentially significant contributions from each of their employments due to the Lower Earnings Limit – currently set at £6,240.
The research found that despite these barriers disabled people who are eligible for auto enrolment have marginally higher participation rates than non-disabled employees.
A total of 83 per cent of eligible disabled workers participate in auto enrolment schemes, which is 2.9 million people compared to 80 per cent of non-disabled eligible employees.
However, because they’re less likely to meet the qualifying criteria (approximately 15 per cent, or 500,000 disabled people in work don’t qualify) as a group they still benefit less overall from automatic enrolment compared to non-disabled people.
At the same time disabled workers also face a higher cost of living. The charity Scope, says disabled people pay on average an additional £583 on day-to-day living expenses when compared to the general population. Families of disabled children face, on average, extra costs of £581 a month. This further limits people’s ability to save, even though they may need higher income in retirement.
The government aims to see one million more disabled people in work between 2017 and 2027 and is committed to reducing the gap between the employment rates of disabled and non-disabled people – known as the disability employment gap. However Now Pensions says while this is having a positive impact on employment rates, there needs to be changes to AE legislation to ensure better pension provision.
Joanne Segars, chair of trustees at Now: Pensions says: “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. We want to make pension saving fairer for everybody in the UK and our policy proposal to remove the £10,000 earnings threshold would help get a further 500,000 disabled people saving for their retirement.”
Financial inclusion commissioner, and former Cabinet Office disability and access ambassador, Johnny Timpson says: “It is absolutely essential that we should now transparently report on, and close, our UK disability employment, pay and pensions gaps.”
He points out than one in five consumers now live and work with a visible or non-visible disability and this figure will increase as society ages. He says he would like to see reporting on disability pay gaps, alongside gender and ethnicity pay and pension gaps.
He adds: “I encourage all employers to embrace board and workplace inclusion plus, and importantly, the social model of disability, and remove the barriers that people with disabilities all too often have accessing communications, tools, products, services and careers, as in doing so, you improve access for all.”
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