Auto-enrolment earnings trigger frozen

The government has now completed its annual review of the pension automatic enrolment earnings trigger and qualifying earnings band and it has announced that the earnings trigger will again be frozen at £10,000 for 2017/18. The earnings trigger determines who is eligible to be automatically enrolled by their employer into a workplace pension scheme.

The qualifying earnings band sets 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 earnings band will continue to be aligned with National Insurance Contribution rates i.e. £5,876 for the lower limit of the qualifying earnings band and £45,000 for the upper limit.

The government is also to carry out a 2017 review of automatic enrolment to explore ways that the policy can be further developed to encourage more people to save into a workplace pension. In particular, the review will gather evidence on groups of workers such as those with multiple jobs who do not qualify for automatic enrolment in any single job and will consider how the growing numbers of self-employed workers can be helped to save for their retirement. The government has also said there will be an opportunity to consider whether the technical operation of the policy is working as intended and the review will additionally examine the automatic enrolment thresholds (the earnings trigger and the qualifying earnings band) and the age criteria for when people start to be automatically enrolled. The aim is to publish a report with policy recommendations towards the end of 2017.

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