The world of the ‘multi-jobbers'
Do you have more than one job?
If so, then welcome to the world of the ‘multi-jobbers'.
Many people love the lifestyle of multi-jobbing – having two jobs at once, two different workplaces, and the variety of doing two different activities every week.
However, it does mean you need to pay more attention to your pension, because even though your working hours could add up to something similar to full-timers, you could be missing out on valuable employer contributions.
This is because of the threshold for auto-enrolment into a company's pension scheme. Not everybody qualifies to be auto-enrolled – as George Orwell wrote in ‘Animal Farm': “all animals are equal, but some are more equal than others.”
To be eligible for auto-enrolment you have to meet the following criteria: you have to be at least 22 but not yet at pension age, and you can't already be enrolled in a different workplace pension scheme, but most important, you have to be earning £10,000 or more a year in the company.
Do you see the problem faced by those with two jobs here? You could well be earning a total of well over £10,000 from your two jobs, but not earning a full £10,000 in the one company, because your income is split over two workplaces – so you can't be automatically enrolled.
It's worth bearing this in mind, because here's how you much you could be losing. We know from research by Aviva that if you are 22 and are auto-enrolled into your company pension, those savings would give you an income in retirement equivalent to £6.55 per hour. That's not a bad deal, it's not so far off today's minimum wage of £7.83 per hour.
The good news is that there could be a simple way around this, even if you're earning well under the magic figure of £10,000. That £10,000 threshold only bars you from automatic enrolment, where your company are required to put you into the scheme.
However, if you are earning over £6,032 per year, you can request to be enrolled - even if you aren't yet 22.
Once you are in the scheme, then from this coming April you would be saving minimum contributions of 8 per cent of qualifying earnings, of which at least 3 per cent must be paid by the employer.
Given that so many people are not taking advantage of being in their company pension, it's a big waste of potential employer contributions and pension savings in the UK. The latest ONS figures show that nearly two million (1,831,127) multi-jobbers have jobs that earn under £10,000 and have therefore not been enrolled in the company's pension scheme.
Based on the average salary from these jobs, that's an unbelievable £90 million of employer contributions every year that go unclaimed by those eligible to ‘bypass'automatic enrolment by asking to be included, but don't know that they could, or simply don't shout loud enough and ask to be put in.
It's worth thinking about, because being in a pension scheme means that today, two in five workers under 30 are doing a great job of saving adequately for their retirement, according to Scottish Widows in their latest Retirement Report. That's 39 per cent of them, which is fantastic when you consider it was just 30 per cent the previous year.
Now, SW also tells us that one in five young workers in the age group are still saving nothing at all for retirement, with another one in five saving much less than they should be. (Scottish Widows say you are saving ‘less than you should be' if you're putting away less than 12 per cent of your salary.)
If you have more than one job, or if you agree that you'd like to look at better ways to ramp up your savings, we can help.
We're not just here for the multi-jobbers, though - we love to hear from you even if you have ‘only' one job.
:: Michael Kennedy and Shaun Doherty are independent financial advisers and pensions specialists, and can be contacted on 028 71886005 . Further information is available on the Facebook page 'Kennedy Independent Financial Advice Ltd' or the website www.mkennedyfinancial.com