Government proposal for more changes to auto enrolment pensions


Local Shrewsbury based independent financial adviser, Steve Embrey, examines the Government’s proposed changes for auto enrolment pensions:


Proposals to change the way auto enrolment works have been published by the Department for Work and Pensions.


A review group looked at auto enrolment to examine whether it’s working properly and whether it could be adjusted to get more low earners saving more into pensions earlier. So, what could the main results of the review mean for auto enrolment schemes?


What are the proposed changes?

  • Upper and lower minimum contribution thresholds


As expected the band of earnings on which minimum contributions is based will change in line with National Insurance thresholds – £6,032 to £46,350 for 2018/19.

  • Removal of the lower contribution earnings threshold


At the moment, auto enrolment minimum contributions are based on a band of earnings in line with National Insurance Contributions thresholds. Removing the lower amount will mean that minimum contributions will now be due on the first pound of earnings although the upper cap will remain. Workers will benefit from increased pension contributions and it is hoped that people with multiple jobs will be more likely to save. For employers with schemes set up on the minimum contribution level, it will mean an increase in cost. Where an employer uses a different contribution structure for their scheme, this proposal should have little or no impact.



  • Reduction of the auto enrolment age


This will mean employers will have to automatically enrol workers from age 18 instead of age 22. The hope is that by saving longer in an auto enrolment scheme, they will build up bigger pension pots. In addition, auto enrolment administration will become simpler. Employers however might see an increase in their contribution costs, especially if they have a lot of younger workers as they will have to pay contributions for them if they don’t already.


When will the changes happen?


The Government will consult on how to introduce the changes over the next few years with a view to introducing them in ‘the mid-2020s’


If you wish to review your pension and secure help with your retirement planning, it is a wise idea to enlist the help of an independent financial adviser to evaluate your situation at the start of the new tax year.


For more information contact Brian Harkins on 01743 382002 or email