The Department for Work and Pensions (DWP) has confirmed changes to the automatic enrolment regime which will see it extended to all employees over the age of 18, following a review of workplace pension saving
The review’s recommendations, which will now be progressed and legislated for where necessary, will see automatic enrolment duties continuing to apply to all employers, regardless of sector and size.
Young people, from 18 years old, will be brought into the scheme, introducing 900,000 individuals into saving an additional £800m through a workplace pension.
Workplace pension contributions calculated from the first pound earned, rather than from a lower earnings limit, which DWP says will bring an extra £2.6bn into pension saving, improving incentives for people in multiple jobs to opt-in, and simplifying the way employers assess their workforces and calculate contributions.
The earnings trigger is set to remain at £10,000 for 2018/19, subject to annual reviews, and contribution levels will be reviewed after the implementation of the 8% contribution rate in 2019.
In addition, the government is to test a series of ‘targeted interventions’ – including through opportunities to work with organisations who act as ‘touch points’ for the 4.8m self-employed people, such as banks and those who contract labour – to explore how technology can be used to increase their pension saving.
David Gauke, secretary of state for work and pensions, said: ‘For an entire generation of people, workplace pension saving is the new normal. And my mission now is to make sure the next generation of younger workers have the same opportunities.
‘We know the world of work is changing, so it is only right that pension saving does too. This ambitious package will see more people than ever before helped onto the path towards building a secure retirement.’
Since its launch in 2012, automatic enrolment has resulted in more than 9m people enrolled into a workplace pension, but the review estimates there are still around 12m individuals under-saving for their retirement, representing 38% of the working age population.
DWP says it will be working towards introducing these reforms in the mid-2020s in partnership with employers and the pensions industry, learning from the contribution increases in April 2018 and April 2019. This will ensure that businesses and savers have time to plan for the changes.
Automatic enrolment review 2017: Maintaining the momentum is here.
