The 10 key points from the auto-enrolment review

The 10 key points are:

Automatic enrolment duties will continue to apply to all employers, regardless of sector and size.

The government wants pension saving to be the norm when most individuals start work. It wants young people from age 18 to benefit from AE and its ambition is to lower the age criteria from 22 to 18. However, this will not take effect until the mid-2020’s.

It wants to change the framework for AE so that pension contributions are calculated from the first pound earned, rather than from a lower earnings limit of £5,876 (in 2017/18). As part of the proposals it says it would also remove the ‘entitled workers’ category.

The government will seek to better understand the full impacts for all stakeholders as part of the consultation process and will explore cost mitigations and funding options. It plans to do a full impact assessment of the increased costs for businesses. For employers, it will explore cost mitigations as part of any relevant consultation.
According to the report, this is because the government recognises these changes present significant additional costs, in particular for employers and the Exchequer, and significant changes for individuals.

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.

It will work to implement the government’s manifesto commitment by testing targeted interventions for the 4.8 million self-employed – including through the opportunity of Making Tax Digital – to identify the most effective options to increase pension saving among self-employed people. It will also provide more information about the trial areas during 2018, following feasibility work.

The government will explore whether there is a need for greater clarity to ensure that those workers who are eligible are automatically enrolled into a workplace pension scheme.

It wants to support the ability of individuals to engage with, and have a sense of greater personal ownership for, their workplace pension saving so that they can plan for the future.

The government wants to build on existing and develop new initiatives that will support individuals’ engagement with and personal ownership of their savings – while delivering better value for customers.