The Government has confirmed the automatic enrolment earnings trigger will increase to £10,000 from April next year, excluding 170,000 people from the reforms.
Auto-enrolment began for the UK’s largest employers in October last year and is being phased in until 2018.
Firms are only required to enrol employees earning above the auto-enrolment earnings trigger of £9,440 – the same level as the personal tax allowance.
This week the Department for Work and Pensions confirmed the earnings trigger will rise to £10,000 from April next year, meaning 170,000 fewer people will be automatically enrolled into a pension.
The lower and upper earnings limits on which auto-enrolment contributions are based have been set at £5,772 and £41,865 respectively.
The DWP says: “With an earnings trigger of £9,440, around 10 million individuals are estimated to be in the eligible target population for auto-enrolment, of which around 37 per cent are women.
“Around 170,000 fewer individuals are eligible for auto-enrolment when the earnings trigger is set at £10,000, of which around 120,000 (69 per cent) are women.”
Master Adviser senior partner Roy McLoughlin says: “This is the right thing to do because it makes auto-enrolment simpler for payroll purposes and easier to explain to employers.”