Proposals to extend auto enolment pensions

In January 2018 the government announced proposals to extend pensions auto enrolment to include younger workers and to amend the way in which contributions are calculated.

According to the press release:

The review’s recommendations, which will now be progressed and legislated for where necessary, will see:

  • Automatic Enrolment duties continuing to apply to all employers, regardless of sector and size.


  • Young people, from 18 years old, benefiting from Automatic Enrolment, introducing 900,000 young people into saving an additional £800 million through a workplace pension.


  • Workplace pension contributions calculated from the first pound earned, rather than a lower earnings limit - this will bring an extra £2.6 billion into pension saving, improving incentives for people in multiple jobs to opt-in, and simplifying the way employers assess their workforces and calculate contributions.


  • The earnings trigger remaining at £10,000 for 2018/19 subject to annual reviews.


  • Contribution levels reviewed after the implementation of the 8% contribution rate.


Under Auto Enrolment rules, employers are required to automatically enrol all eligible workers into a workplace pension scheme and pay a minimum contribution into their pension.  Employees do, however, have the right to opt out of auto enrolment.  Currently workers who are aged between 22 and the state pension age with earnings of £10,000 per annum are eligible to be auto enrolled.  Younger employees and those who do not meet the minimum income requirement can opt to make pension contributions.  The government plan to reduce the lower age limit to 18 by the mid 2020's, in order to encourage younger workers to get into 'the habit of saving'.



John BaxterComment