Changes in Auto-Enrolment?

Late in September it is expected that Extension of Auto-Enrolment No 2 bill will be passed by the House of Commons. The aim of the bill is to increase personal pension savings by a some £45 billion over the next 30 years.

The two key reforms under consideration are the removal of the lower earnings limit (LEL), currently £6,240 per annum, for minimum contributions, so an employee starts to make contributions from the first pound they earn & the lowering of the qualifying age from 22 to 18.

Removing the LEL would obviously increase the size of the contribution paid into an employee’s pension pot each month. Similarly, reducing the qualifying age to 18 would provide a good platform for young adults to start saving for their retirement that much sooner.

The bill makes no mention of what will happen to the level of employer contributions (currently sitting at 3% for most pension schemes). Nor indeed whether employee contributions will be increased from the current 5% level. There is, as yet no timeframe mentioned for when the changes will be implemented & once again, any reforms to Auto-Enrolment will not cover the self-employed or do much for low earners.

For more information or advice, please do get in touch with your local Whitings LLP Office.

Disclaimer - All information in this post was correct at time of writing.