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Construction workers headed towards pension poverty

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The majority of construction workers in the UK are not saving towards their retirement, research by Unite, the UK’s construction union, has found.

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

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

Are construction workers digging their own pension black hole?

Following a freedom of information request to the Department of Work and Pensions, the government has revealed that official estimates show that 797,000 (employees) in the construction sector are paying into a pension of any form. This is from a total construction workforce of 2.225 million (which is divided between 1,507 employees and 712,000 officially self-employed workers), according to Office for National Statistics figures.

This means that just 36 per cent of the construction workforce is known to be paying into a pension.

“As this is the figure for the entire construction industry, the percentage of blue collar construction workers contributing to a pension is expected to be considerably lower,” said Unite.

Are self-employed construction workers heading towards pension poverty?

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

Is government inaction part of the problem?

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, since then.

However, in the FOI response the DWP said: “We aim to commence the next stage of these trials this summer.”

Unite says these factors are contributing to the pension hole:

The low level of pay for some unskilled workers entering the construction industry makes it near impossible for them to save for a pension
  • “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 results in workers believing it is not worth making pension contributions
  • Construction employers’ hostility to paying pension contributions
  • The low level of pay for unskilled workers


“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,” said Unite’s Swain.

Swain believes that the government needs to take urgent action to begin plugging this black hole in construction pension saving.

By putting in support mechanisms for temporary and self-employed workers a generation of workers could avoid poverty in retirement, which would ultimately lead to a burden on the public purse.

“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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