News

Further changes proposed to the auto-enrolment regime

The Department for Work and Pensions (“DWP”) has recently issued a consultation paper on changes to the earnings thresholds that apply for automatic enrolment purposes.  

Under the auto-enrolment requirements, broadly, a jobholder is eligible for auto-enrolment in a qualifying workplace pension scheme if, among other things, his earnings in a pay reference period exceed the "earnings trigger". Employees who do qualify are entitled to minimum pension contributions by reference to what is known as the qualifying earnings threshold.

For 2012/13, the earnings trigger is £8,105. The DWP proposes that for the 2013/14 tax year this should rise to £9,205, to align with the tax threshold for PAYE.
For 2012/13, the lower qualifying earnings threshold used for calculating minimum contributions is £5,564. The DWP is proposing that for the 2013/14 tax year this should rise to £5,720, to be in line with the lower earnings limit for paying National Insurance Contributions.

For 2012/13, the upper qualifying earnings threshold used for calculating minimum contributions is £42,475. The DWP's stated preference is that for the 2013/14 tax year, this threshold should reduce to £41,450, in order to reflect the reduction in the upper earnings limit for paying National Insurance Contributions. However, the DWP acknowledges that maintaining the current threshold (or increasing it in line with earnings) is another possible option. We will let you know the outcome of this consultation.