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Auto-enrolment minimum age to be reduced

The government intends to reduce the minimum age that employers must enrol eligible staff into a workplace pension scheme from 22 to 18 years.

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The minimum age reduction is among a number of measures announced by work and pensions secretary David Gauke as part of a government review of auto-enrolment, with changes scheduled for the mid-2020s.

 

Other measures, which will require legislation, involve:

 

  • Contributions calculated as a proportion of all earnings up to £45,000 (the threshold of the higher rate of tax) rather than the current system which calculates it as a proportion of earnings between £5,876 and £45,000.
  • Annual reviews of the trigger point for auto-enrolment (at present, when a worker earns £10,000 or more). Contribution levels will also be reviewed.
  • Exploring the use of technology to encourage the UK’s 4.8 million self-employed people to save for retirement.

 

Gauke told the BBC’s Andrew Marr Show there had been "greater saving for pensions" since auto-enrolment came into effect in 2012.

 

"We want to extent that to young people under 22,” he added. "I think we will get more people into the habit of saving."

 

Former pensions minister Steve Webb, who was in office during the initial roll-out of auto-enrolment, said: "There are some great ideas in this review, including starting pension saving at age 18 and making sure that every pound that you earn is pensionable.

 

"But the proposed pace of change is shockingly lethargic.

 

"Talking about having reforms in place by the mid 2020s risks leaving a whole generation of workers behind."

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