Women part time workers set to benefit as government announces intention to leave auto-enrolment trigger unchanged
The Government has released the review of its annual auto-enrolment thresholds (available here).
- Earnings trigger proposed to remain frozen at £10,000 – broadly eligible employees earning above this level are auto-enrolled.
- This would bring an additional 130,000 individuals into scope of being auto-enrolled, 71% of whom are women.
- Estimated further £23 million of pension savings in 2016/17 as a result of the change.
- Level of earnings at which contributions do not have to be paid due to remain unchanged at £5,824, but upper limit due to rise by £615 to £43,000.
- 180,000 workers at risk of receiving no tax relief. Government estimates 180,000 workers earn between £10,000 (the proposed earnings trigger) and £11,000 (personal allowance for 2016/17). If these workers are enrolled into certain types of workplace pension (net pay) they will miss out on tax relief.
Nathan Long – Head of Corporate Pension Research at Hargreaves Lansdown;
‘A huge number of workers, many of whom are women, continue to miss out on employer contributions. Maintaining the earnings trigger at £10,000 will bring more of this group into saving for retirement for the first time. Those earning under £10,000 should remember they can ask to opt in to their employer’s pension and take advantage of valuable contributions they could be entitled to. The increasing gap between the earnings trigger and the personal allowance will bring net pay arrangements firmly into focus as staff earning below £11,000 who are enrolled into these schemes will miss out on the tax relief boost to their pension savings.’
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