The £10,000 automatic enrolment earnings trigger for workplace pensions will not be changed for 2022/23, and insurer Scottish Widows has been quick to react.
In an update by the Department for Work & Pensions, the government stated: “The earnings trigger is one of the three key factors which ultimately governs who gets enrolled into a workplace pension scheme through automatic enrolment.
“The government’s view remains that if the trigger is too high, then low to moderate earners who can afford to save (and who are the main target group of the policy), may miss out on the benefits of a workplace pension. Set it too low, however, and the predominant impact will be upon people for whom it could make little economic sense to save into a pension and thereby divert income away from their day-to-day needs.”
Set in legislation, the automatic enrolment earnings thresholds are reviewed every year.
The new guidance reads: “The Secretary of State has considered the latest analytical evidence and the policy objectives and has concluded that the existing threshold of £10,000 remains the correct level and will not change for 2022/23.
“This represents a real-terms decrease in the value of the trigger. Therefore, as earnings continue to grow, keeping the earnings trigger at £10,000 will bring in an additional 17,000 savers into pension savings when compared to increasing the trigger in line with average wage growth.”
Scottish Widows head of policy Pete Glancy commented briefly following the announcement.
In a statement sent to Insurance Business, Glancy said: “Keeping the trigger frozen at £10,000 will see more people auto-enrolled over time as earnings increase – but it will take a very long time for those whose earnings exceed £10,000 from more than one job to get some pension contributions from their employers. The trigger needs to go.”
Separately, in January, Aviva called on the UK government to immediately put in place a plan for how and when changes to automatic pension enrolment thresholds will be implemented.
