Govt keeps AE earnings trigger despite calls to scrap it

Last week, Now Pensions called for an urgent policy change to remove the £10,000 earnings trigger to bring more people into pension saving.

The provider also wants to see the minimum age lowered from 22 to 18 and the qualifying earnings threshold removed so people can start saving from the first pound of earnings, as proposed by the government's 2017 auto-enrolment review.

The government has already committed to extending auto-enrolment to low-income and younger workers by the mid-2020s but Now Pensions wants to see a concrete timeline.

This was after last month (January 26), Opperman failed to set out a timeline for reforming auto-enrolment in a parliamentary debate on the policy.

Tom Selby, head of retirement policy at AJ Bell, said: “The previous government proposed scrapping the auto-enrolment earnings bands – so every pound earned qualifies for a matched contribution – and extending the scheme to those aged 18 (the current minimum qualifying age is 22).
“Both these measures seem proportionate and sensible, and the current administration should clearly set out when this will happen so businesses have time to plan.”

Last month, Conservative MP Richard Holden tabled a motion in the House of Commons to expand auto-enrolment in line both with the DWP’s recommendations and those made by think tank Onward, which proposed a phased approach to the changes.

Under his proposals, the earnings trigger and age limit would be abolished in 2023, but the qualifying earnings limit would be reduced gradually and not be entirely removed until 2026.