Union warns of pension ‘black hole’ for construction workers

Only 36% of the UK’s construction workforce is known to be paying into a pension, according to research from the Unite union.

Union warns of pension ‘black hole’ for construction workers

A freedom of information request by the construction union to the Department for Work and Pensions (DWP) found that official estimates show that 797,000 employees in the construction sector, from a total construction workforce of 2.225 million, are paying into a pension of any form.

The union said that since the figure is for the entire construction industry, the percentage of blue collar construction workers contributing to a pension is expected to be considerably lower.

The number of self-employed workers paying into a pension is also likely to be very low, it added. Even if they have a private pension, as they don’t receive any employer contributions, the union said it is very unlikely that any pension saving a self-employed worker makes will prevent poverty in retirement.

In 2017 the government rejected extending the auto-enrolment pension system to the self-employed. The government has said it has begun to trial using financial digital platforms to encourage the self-employed to save towards their pensions. In the FOI response the DWP said: “We aim to commence the next stage of these trials this summer.”

According to Unite, factors that result in construction workers not having a pension include rampant bogus self-employment with roughly half of blue collar construction workers being officially registered as self-employed and therefore not eligible for the auto-enrolment scheme; the extensive use of umbrella companies where workers are required to contribute both employers’ and employees’ pension contributions making them unaffordable for many; short-term engagements which result in workers believing it is not worth making pension contributions; construction employers’ hostility to paying pension contributions and also the low level of pay for unskilled workers.

Unite national officer for construction Jerry Swain, said: “These figures are deeply troubling. With the majority of construction workers not saving for retirement, we are creating a destitute generation of future pensioners.

“Even if workers are saving towards a pension, there is no guarantee that they are saving sufficient amounts to prevent poverty in retirement.

“The way that construction is organised, with short-term engagements, rampant bogus self-employment and nefarious schemes such as umbrella companies, it is incredibly difficult for construction workers to have confidence in their continued employment so as to allow them to consistently pay into a pension scheme.

“The government needs to take urgent action to begin plugging this black hole in construction pension saving, the consequences of not doing so do not bare thinking about.

“After a lifetime of hard manual work the ultimate ignominy for construction workers is to face poverty in retirement. Put simply, construction workers deserve better.”

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