New legislation paves way to expand the scope of automatic enrolment

A Private Members Bill aiming to expand the scope of automatic enrolment has received Royal Assent.  

The new legislation provides powers to abolish the Lower Earnings Limit for contributions and reduce the age for being automatically enrolled from 22 to 18.

The DWP press release states that the changes mean that millions more people including younger and lower earning workers will be helped to save more into their pensions. It also states that these changes combined with the Mansion House Reforms announced by the Chancellor in July, mean that a minimum wage earner could see their pension pot increase by over 85%.

Minister for Pensions, Laura Trott, said:

“Automatic enrolment has been a phenomenal success, and we are determined to go further. It’s great news that the Private Members’ Bill has successfully passed through Parliament and received Royal Assent.

This will mean younger workers and those in lower paid employment will be able to fully participate in Automatic Enrolment. For the first time, every eligible worker will benefit from an employer contribution from the first pound earned – which will make a huge difference to their eventual pension.”

Importantly, the new legislation will not result in any immediate change. It simply provides the powers to amend the age limit and lower the qualifying earnings limit for automatic enrolment. Any changes will be subject to consultation before implementation. The consultation is expected to be issued shortly. However, employers are expected to be given significant notice before the changes need to be implemented.

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