Proposed expansion of auto-enrolment

05 Jan 2018

The UK government has unveiled a two-pronged plan to expand auto-enrolment. According to the Department for Work and Pension’s review, which looks at past, present and future workplace pension saving, automatic enrolment’s "harnessing of inertia" has worked, claiming that "the financial behaviour of millions of people has changed, so that they now view pensions as a normal part of their pay package."

The review’s recommendations, which will now be progressed and legislated for where necessary, will see:

- Automatic enrolment duties continuing to apply to all employers, regardless of sector and size
- Young people, from 18 years old, benefiting from automatic enrolment, introducing 900,000 young people into saving an additional £800 million through a workplace pension
- Workplace pension contributions calculated from the first pound earned, rather than from a lower earnings limit – this will bring an extra £2.6 billion into pension saving, improving incentives for people in multiple jobs to opt-in, and simplifying the way employers assess their workforces and calculate contributions
- The earnings trigger remaining at £10,000 for 2018/19, subject to annual reviews
- Contribution levels reviewed after the implementation of the 8 per cent contribution rate in 2019
- The government testing a series of "targeted interventions" – including through opportunities to work with organisations who act as ‘touch points’ for the 4.8 million self-employed people, such as banks and those who contract labour – to explore how technology can be used to increase their pension saving

The Secretary of State for Work and Pensions, David Gauke, says: “We are committed to enabling more people to save while they are working, so that they can enjoy greater financial security when they retire.

“We know the world of work is changing, so it is only right that pension saving does too. This ambitious package will see more people than ever before helped onto the path towards building a secure retirement.”

Neil Carberry, CBI Managing Director responded: "[The] report shows how far we have come, and makes some sensible suggestions about how to evolve the system in future. But much of the original plan is still to be delivered, with contribution rates rising over the next two years. For firms who are facing rising costs across the board - and employees with other legitimate calls on their income - it is right to complete this first phase and let it bed in before making further changes. A timeline of the mid-2020s for new proposals would be sensible and enjoy business support."

Are you on top of auto-enrolment?

Our experts at Beavis Morgan are well versed in all aspects of payroll management including the set up and administration of auto-enrolment. If you would like to know more, please contact Matthew Burge or your usual Beavis Morgan Partner.

Read more: Auto-enrolment – The key questions asked and answered