Government to maintain auto-enrolment earnings trigger for pensions


The government is to maintain the current auto-enrolment earnings trigger for workplace pensions into 2016-2017.

The trigger, which determines which employees are eligible to be automatically enrolled into a workplace pension, will remain at £10,000.

The Department for Work and Pensions’ (DWP) Review of the earnings trigger and qualifying earnings band for 2016/17 report states: ‘Automatic enrolment is now entering a crucial stage in the roll out of this major reform and it is not considered to be the right time to make significant changes to the existing framework.’

The government is to keep the earnings trigger threshold under review in light of the outcome of the consultation into pensions tax relief and the introduction of the national living wage, which will come into effect in April 2016.

The lower limit of the qualifying earnings band for auto-enrolment will remain at £5,824 into 2016-2017.

The upper limit is to increase from £42,385 to £43,000.

The qualifying earnings band sets the minimum contribution levels for money purchase schemes. The minimum of the band is also relevant to defining who can opt in if they earn under the earnings trigger. The upper limit caps mandatory employer contributions.

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Frances O’Grady, general secretary at the Trades Union Congress (TUC), said: “By freezing the earnings trigger for automatic enrolment, the government has missed the opportunity to bring millions of low paid and part-time workers into the pensions system.

“We know from the success of automatic enrolment that relying on these groups to voluntarily opt-in to pension saving is a very ineffective way of reaching more workers. Without action, we risk leaving lower earners without the vital benefits provided by regular pension savings.”