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Home Lifestyle Auto-enrolment thresholds held amid cost-of-living concerns

Auto-enrolment thresholds held amid cost-of-living concerns

by uma

Auto-enrolment thresholds held amid cost-of-living concerns

  • The government has confirmed auto-enrolment thresholds will be held at their current levels for the next year.
  • The decision was taken to “ensure the continued stability of the policy in light of the impact of Covid-19 and prevailing economic factors.
  • Separate analysis published this morning from the Pensions Regulator shows aggregate asset values in occupational DC schemes are now £143bn.
  • This is an increase of £29bn or 26% since last year and 546% since the beginning of 2012.
  • There are 26.3m memberships in occupational DC schemes. Up 1069% since 2012.
  • Average assets per membership have fallen by 66% since 2012.They were £5,700 in Jan 2023 compared to £17,200 in 2012.

The statement from Laura Trott, under-secretary of state for pensions can be found here https://questions-statements.parliament.uk/written-statements/detail/2023-01-26/hcws520

The Pensions Regulator has published DC scheme return data DC trust: scheme return data 2022 to 2023 | The Pensions Regulator

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown:

“Today’s statement will have come as no surprise given the enormous economic challenges people are facing. With budgets being squeezed like never before people are making difficult financial decisions based on balancing saving for their future with meeting their day-to-day living costs. Any move to increase the amount going into a pension by actively reducing or removing earnings limits may be enough to tip people over the edge and opt out. However, it’s worth saying freezing the trigger and lower earnings limits will see more people being brought into auto-enrolment if they get a pay increase.

Auto-enrolment has been an enormous success. Data published by the Pensions Regulator shows membership of DC schemes has soared an incredible 1069% since it began.

Aggregate assets have swelled but it is important to note that this is largely because more people are contributing – if we look at average assets per membership, they have gone down substantially though this could also be because we are seeing more people accumulate multiple pensions. It is clear there is more work to be done on auto-enrolment – we do need to find ways of getting people to contribute more and the government has come under pressure to outline a timetable for the introduction of the 2017 Auto-enrolment Review reforms which would certainly have a positive effect if they can be introduced at a point when this crisis has passed.”

The 2023-24 Annual Thresholds

  • The automatic enrolment earnings trigger will remain at £10,000.
  • The lower earnings limit of the qualifying earnings band will remain at £6,240.
  • The upper earnings limit of the qualifying earnings band will remain at £50,270.