Update: pensions automatic enrolment

Significant change to the pensions automatic enrolment regime, extending enrolment to younger workers, and removing the lower earnings threshold for qualifying earnings, has been said to be on the horizon for some time. A government Review in 2017 stated that the aim was to have change in place by the mid-2020s. So where are we now? We outline the current state of play.

The plan is to lower the age limit to participate in auto-enrolment to 18 from 22. In addition, pension contributions are to be calculated from the first £1 earned, essentially doing away with the lower earnings threshold (£6,240 per year for 2024/25) and introducing contributions from £1 to the upper limit (£50,270 per year in 2024/25).

When they take place, these developments will certainly mark a major milestone. For employers, they will come with a price tag, as pensions contributions are paid for more employees, and on a bigger slice of earnings. For workers, there’s also a cost, and it’s possible that some will want to opt out of auto-enrolment or stop contributions. Communicating all this to your workforce will be particularly important.

The question is — when? Though legislation enabling the Secretary of State to make regulations bringing in the changes received Royal Assent in 2023, no timetable for implementation has been announced. A lack of clarity is never good news for employers, and we will do all we can to update you here. Please do keep in touch with us for details of further developments.

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