Proposed earnings trigger and qualifying earnings bands 2018-19
19 December 2017
The automatic enrolment earnings trigger is to be frozen at £10,000 and the lower and upper thresholds are to remain aligned with the National Insurance contributions (NICs) Lower Earnings Limit (LEL) and Upper Earnings Limit (UEL).
The automatic enrolment earnings trigger determines at what point an eligible person gets automatically enrolled into a workplace pension. The qualifying earnings band sets minimum contribution levels for money purchase pension schemes. The minimum of the band is also relevant for defining who can opt in if they earn under the earnings trigger. The government reviews these every year and revises them if appropriate.
The proposed automatic enrolment earnings trigger and qualifying earnings bands for 2018-19 have been announced, as detailed in the table below.
|
Current and proposed automatic enrolment thresholds |
|||
|
|
Trigger |
Lower limit qualifying earnings band |
Upper limit qualifying earnings band |
|
Current (2017/18) |
£10,000 |
£5,876 |
£45,000 |
|
Proposed (2018/19) |
£10,000 |
£6,032 |
£46,350 |
The supporting analysis states that these decisions have been reached as a result of several key considerations.
Firstly, stability for employers is crucial, with staging not yet complete and the phasing (the planned increases in minimum contribution rates for qualifying scheme) of contributions set to begin in April 2018.
The automatic enrolment review 2017 highlights the need for stability as the post staging period of the policy is implemented. Removing the immediate prospect of additional change from employers when they are preparing for the upcoming contribution increases will allow for a smooth transition into the start of phasing while still providing a meaningful level of contributions for savers.
Additionally, the current triggers and limits are understood and will continue to provide an important element of consistency for both employers and individuals in the coming year while still striking a balance between providing meaningful levels of saving and affordability.