We look at what the main results of the review could mean for employers.
The review concluded that there is currently no need to change the auto enrolment earnings trigger of £10,000 although it will continue to be reviewed every year to make sure its level is sustainable and meets its objectives. This should have little impact on employers at the moment.
Removal of the lower contribution earnings threshold
At the moment, auto enrolment minimum contributions are based on a band of earnings equivalent to the National Insurance Contributions lower and upper thresholds. Removing the lower amount will mean that minimum contributions will now be due on the first pound of earnings although the upper cap will remain. Workers will benefit from increased pension contributions and it is hoped that people with multiple jobs will be more likely to save. For employers with schemes set up on the minimum contribution level, it will mean an increase in cost. Where an employer uses a different contribution structure for their scheme, this proposal should have little or no impact.
The Government will consult on how to introduce the changes over the next few years with a view to introducing them in ‘the mid 2020s’.
Rest assured we’ll be involved in any consultation process and we’ll keep you and your adviser up to date on how these proposals might affect your pension scheme as we approach their implementation.
Read the DWP paper.