As part of the Government’s 2017 Auto-Enrolment (AE) review - the Department for Work and Pensions (DWP) has published its thinking on workplace pension reforms. The key points are as follows:
Automatic enrolment duties will continue to apply to all employers, regardless of sector and size in the economy
The government wants pension saving to be the norm when most individuals start work. It wants young employees from age 18 to benefit from AE and its ambition is to lower the age criteria from the current starting age 22, to age 18. However, this is not to start until the mid-2020's.
It wants to change the framework for AE so that pension contributions are calculated from the first pound earned, amending the qualifying earnings tier and also remove the ‘entitled workers' category.
The earnings trigger will remain at £10,000 a year in in 2018/19, subject to annual review. However, although there will be no changes now, the report states the government approach ensures factors including affordability for employers and whether or not it ‘pays to save' for individuals, are kept under consideration.
The government will continue to monitor and evaluate the impact of increasing contributions and will carry out further analysis to inform a longer-term debate on the right balance between statutory contribution rates and voluntary additional retirement savings.
Please contact us for further information and how we can ensure your business understands and implement these pending changes.