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Automatic Enrolment Earnings Trigger and Qualifying Earnings Band Review 2020/21

Department for Work and Pensions written statement – made on 13th February 2020.

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Photo of Guy Opperman Guy Opperman The Parliamentary Under-Secretary of State for Work and Pensions

Automatic enrolment into workplace pensions (AE) has been a great success to date with over 10 million people having been automatically enrolled and more than 1.6 million employers meeting their duties. Over 2019/20, working people will save an estimated extra £18.8 billion into workplace pensions as a result of these reforms.

The main focus of this year’s annual review of the AE earnings trigger and qualifying earnings band (the AE thresholds) is to ensure the continued stability of the policy whilst learning from the April 2019 AE contribution rate increase. We also want to ensure that our approach continues to enable individuals, for whom it makes economic sense, to save towards their pensions whilst also ensuring affordability for employers and government. The review has concluded that the earnings trigger will remain at £10,000 and both the lower and upper earnings limits will continue to be aligned to the National Insurance Contribution thresholds.

I intend to lay an Order before Parliament following the February recess which will serve to amend the Pensions Act 2008 so that, for 2020/21:

- £6,240 for the lower limit of the qualifying earnings band;

- The Automatic Enrolment earnings trigger will be maintained at £10,000.

- The upper limit of the qualifying earnings band will remain at £50,000.

The analysis supporting the proposed revised AE thresholds will be published in due course. A copy of this will be placed in the house library and will be available on the www.gov.uk website, following publication.

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This statement has also been made in the House of Lords: HLWS110