Omnium Wealth Management

Automatic enrolment reforms – are we nearly there yet?

In 2017, the then government produced its first Automatic Enrolment Review, with recommendations to expand the eligibility criteria from the mid-2020s.

For various reasons, there has been little progress to date. However, in late September, Pensions Minister, Guy Opperman stated, “We are committed to implementing the 2017 Automatic Enrolment Review, lowering the age for being automatically enrolled from 22 to 18 and abolishing the automatic enrolment lower earnings limit [for schemes using Qualifying Earnings], so that contributions are payable from the first pound of earnings.”

The reason for the minimum age of 22 has never been fully explained. There is arguably a link to the minimum wage threshold, although some have thought it was linked to Magna Carta. As this document was signed nearly three hundred years before the concept of a pension was invented, this is unlikely.

Quite when these new reforms will be introduced is still unclear and will take a number of years to pass through parliament, become law and then be physically implemented.

In my opinion, the likelihood of this actually happening in the next few years is somewhat doubtful. Given the current economic situation and the increase in National Insurance, any increased cost to employers will be most unwelcome.

Nevertheless, the necessity to start pension saving as early in life as possible is well known. Moreover, I have never really understood nor welcomed a minimum threshold on earnings.

Let us hope work can start soon, so we can see the benefits of these changes before the end of the decade.

Get in touch

For a review of your existing company pension scheme, or for help and advice implementing any other aspect of an employee benefits package, give me a call today on 01483 205890, or email me here.


 

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