Just 36% of construction workers pay into a pension, research finds

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

Following a freedom of information request to the Department of Work and Pensions, the government has revealed that official estimates show that just 797,000 employees in the construction sector out of 2.225 million in the total workforce, are paying into a pension of any form.

Therefore, just 36% of the construction workforce is known to be paying into a pension, with the percentage of blue-collar construction workers contributing to a pension expected to be considerably lower.

Moreover, the number of self-employed workers paying into a pension is likely to be very low. Even if they have a private pension, as they do not receive any employer contributions, 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.
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
  • The low level of pay for unskilled workers.

Jerry Swain, Unite’s national officer for construction, 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.”