Government delays to pension reforms could result in low earners being thousands of pounds worse off, according to analysis from Trades Union Congress (TUC).

The government had pledged to remove the Lower Earnings Limit (LEL), but TUC said that ministers are “dithering” and have only given a “vague commitment” to lower the threshold in the mid-2020s.

Currently, the LEL is set at £6,000, which means that a worker's first £6,000 of annual earnings does not count towards their pension contributions.

This is a high proportion of a low earner's wages, and TUC’s research found that a six-year delay to LEL reform could result in low-income workers missing out on £12,000 in their pension pot.

TUC also found that abolishing the LEL could mean a further £2.6bn going to workers’ pension funds per year.

Commenting on the research, TUC deputy general secretary, Paul Nowak said: “Automatic enrolment has been a great success. For the first time, many working people on low incomes have employers paying towards their old age.

“But the government needs to build on its success so that every worker gets the pension pot they deserve.

“Our message to government is simple – stop dithering, deliver on your promises and ensure every pound earned by every worker counts towards their pension.”

TUC found that a delay of just six years could mean a worker earning £10,000 loses out on a sixth of the value of their pension pot. The losses include not only the missed contributions, but the investment gains foregone.

Workers on annual earnings of £10,000 would see the amount saved in their pension every year more than double if contributions were calculated from the first pound of earnings, TUC revealed.

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