Under current rules, you are auto-enrolled into your workplace pension scheme when you are aged 22 and older and you earn above £10,000 – but this is due to be lowered to 18
Huge changes to the pension auto-enrolment scheme look set to be delayed in what experts have today described as “deeply disappointing” news.
Pension auto-enrolment sees you automatically placed into your employer’s workplace pension, unless you choose to opt out. Under current rules, you are auto-enrolled when you are aged 22 and older and you earn above £10,000. This is due to be lowered to 18, which means workers will be encouraged to start saving for their retirement from a much younger age.
The lower earnings limit – the minimum level of earnings on which you and your employer have to pay contributions – is also being abolished. The limit is currently set at £6,240. The Government previously said these changes would be brought in by the mid-2020s.
But speaking at the Pensions Age Spring Conference today, Pensions Minister Paul Maynard said a consultation will take place in the “mid to later part of this decade”. As reported by Pensions Age, Mr Maynard said: “We do need to consult further on the detailed implementation of any measures that increase contributions. I know there’s great eagerness that we get on with this, but we have to do it in the right way at the right time. We are committed to doing so during the mid to later part of this decade.”
The Extension of Automatic Enrolment Bill received Royal Assent last September. Kate Smith, Head of Pensions at Aegon, said: “I’m deeply disappointed that the Pensions Minister has confirmed that 2017 reforms of auto-enrolment implementation consultation will be delayed to the mid or late 2020s. We have been expecting this consultation for over six months now, ever since the Pensions Act enabling these reforms, passed back in September 2023.
“Once implemented, this will widen the scope of auto-enrolment by lowering the minimum age from 22 to 18 and removing the salary offset so pension contributions are made from the first pound, once the reforms are implemented. This is bad news for pension savers, particularly low earners, who are disproportionately women.
“As time marches on, and with an election looming, it could be over ten years on from the 2017 review before changes start to be implemented, with potentially millions of employees losing out on higher pension contributions and facing poorer retirement income outcomes.”