New data published by the Office for National Statistics reveals that 6,349,000 UK employees are not receiving employer contributions to a workplace pension.
Auto-enrolment into workplace pensions has been in place since October 2012. It has helped increase the proportion of employees with workplace pensions from 47% in 2012 to 77% in 2019.
However, millions of workers are still excluded because employers do not have to automatically enrol staff earning less than £10,000 a year, or under the age of 22.
The rules also exclude the first £6,136 of pay when calculating the minimum contribution based on wages earned.
The combined effect means that low-paid workers miss out on up to £300 of annual pension contributions from their employer.
Part-time workers are at particular risk of missing out. Just 58% of part-time employees belong to a workplace pension, compared to 86% for full-time workers. This means women are disproportionately affected, as they are three times more likely to be in part-time work.
The TUC says that workers generally need total contributions of at least 15% of their wage to be sure of a decent income in retirement. The union body is calling on the government to remove the earnings limits, and to raise the minimum contribution required from employers.
TUC General Secretary Frances O'Grady said: "Automatic enrolment has helped many more working people get pension contributions from their employer."But the current rules exclude lots of low-paid and young workers. And that's why so many people still don't have a workplace pension."
No more excuses – it's time the government ended this injustice. Pension schemes are a vital part of earnings. There should be a pension contribution in every pay packet."
Workplace pension rules: are you doing right by your employees?
All employers must offer a workplace pension scheme and automatically enrol workers if their annual earnings are at least £10,000 and they are 22 years old or above.
Workers who earn between £6,136 and £10,000 can still opt in. But if a worker is on less than £6,136 annually, the employer does not have to allow them entry to the scheme or make contributions.
The scheme currently requires minimum contributions relative to wages of 3% from the employer and 5% from the employee – a combined minimum of 8%.
But this 8% is calculated on 'band earnings' - between £6,136 and £50,000 – meaning contributions for many workers are significantly lower than 8%.