25 March 2024

The Department for Work and Pensions (DWP) has released the supporting analysis to accompany the annual review of automatic enrolment.

The review looks at the earnings trigger and qualifying earning bands and assesses how they impact the three guiding principles established in the first two reviews. Those principle are:

  • Will the right people be brought into pension saving? In particular, at what level will the earnings trigger bring in as many people as possible who will benefit from saving? At what level does the trigger need to be set to avoid the automatic enrolment of those who are unlikely to benefit from saving? And what are the equality implications of the different options?
  • What is the appropriate minimum level of saving for people who are automatically enrolled? Everyone who is automatically enrolled should pay contributions on a meaningful portion of their income. To ensure this, we need to maintain an appropriate gap between the LEL and the earnings trigger.
  • Are the costs and benefits to individuals and employers appropriately balanced? The cost implications of the thresholds remain relevant, and we need to factor in the continuing importance of simplicity of administering automatic enrolment.

The trigger and bands have been retained at the same values as the 2023-24 tax year, as shown below.

 


Trigger

Lower limit qualifying earnings band

Upper limit qualifying earnings band

Current (2023 to 2024)

£10,000

£6,240

£50,270

Proposed (2024 to 2025)

£10,000

£6,240

£50,270

The CIPP are still waiting for further information on potential consultations regarding the private members’ bill which seeks to reform automatic enrolment by removing the lower qualifying earnings band and make everyone 18 years old and over eligible.


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