28 March 2012

Automatic Enrolment Pension Thresholds Increased

Automatic Enrolment Pension Thresholds Increased

The automatic enrolment policy was first announced in 2008 to boost the low level of pension savings among UK workers especially in the private sector. Higher earnings thresholds for automatic enrolment into pension schemes have now been confirmed by the government to take account of higher average earnings since 2008

• Previously contributions were due to apply to earnings lying between £5035 and £33,500 
• Minimum contributions will now be payable on earnings between £5,564 and £42,475.
• As well as the wider earnings band, the obligation for staff and employers to make contributions will only be triggered once someone's earnings reach £8,105 - up from the initial trigger point of £7,475.
• The new top-up pension rules will be phased in over six years from October 2012.
• The government intends that between four and eight million more workers will be recruited into existing company schemes, or alternatives such as Nest.