“Balancing economic sense and affordability, for both employees and employers, the Government has quite rightly frozen the auto-enrolment thresholds for another year. As earnings continue to rise at record levels the thresholds freeze not only means that more people will be bought into workplace savings, they will also benefit from a higher employer pension contribution.
“The earnings trigger, for a single job, has now been frozen since 2014/15, bringing increasing numbers of low-paid workers into auto-enrolment, enabling them to save for their future self. Auto-enrolment faces its biggest challenge in the 10 years of its existence. It’s important that the pension industry, providers and the government work together to minimise employees opting out or reducing their pension savings without understanding the consequences on their financial resilience and later life plans. By saving in a workplace pension scheme, employees are automatically doubling their pension contributions; they pay 4%, the government pays 1% and their employer pays 3%. Opting out or reducing their pension contribution below this level means they run the risk of losing their employer contribution and effectively taking a pay cut.
“Fixing the earnings band at £6,240 and £50,270 not only enables people to save slightly more, but should enable employees who earn between £6,240 and £10,000 a year in a single job to opt in to a pension scheme and benefit from an employer pension contribution, possibly for the first time.”
Review of the Automatic Enrolment Earnings Trigger and Qualifying Earnings Band for 2023/24
|
