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Auto-enrolment to include teenagers under new plans

Pensions-savings-retirement-piggy bankThe Government will lower the age at which people will be auto-enrolled into a workplace pension from 22 to 18 as part of the 2017 review into auto-enrolment.

The proposal, due to take effect from the mid-2020s, is part of a package of measures the government wants to introduce to improve the coverage of workplace pensions.

These include removing the lower earnings limit, which is currently £5,875, so individuals can put more of their salary into their pensions and keeping the earnings trigger at £10,000 for 2018/19 subject to annual reviews.

A document published yesterday on the Department for Work and Pensions website estimated changing the lower earnings limit would create an additional £2.6bn in annual pensions savings in 2020/21.

This would come from an additional £1bn in employer contributions, £1.2bn in employee contributions and £0.4bn in income tax relief.

Furthermore lowering the age limit from 22 to 18 would increase the number of eligible savers by 900,000 and total annual pension savings by £770m in 2020/21.

The combined effect of lowering the age limit to 18 and removing the lower earnings limit would generate over £3.8bn in additional pension saving by 2020/21.  



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Guide: Johnson Fleming produces auto-enrolment checklist

For a job as big as managing the auto-enrolment changes, it’s important to know what has been completed and what still lies in front of you to give you the reassurance that everything is in hand. Getting the planning and project management right at the outset can help you see the path ahead and ensure everyone knows their roles and responsibilities. To help with this, Johnson Fleming has produced a checklist outlining every step that needs to be taken when preparing for auto-enrolment.


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  1. Yet again a perfect demonstration of how out of touch our legislators are.
    1. Youngsters are not exactly on large salaries and by 2019 8% is going to be swiped – aren’t they just going to love that!
    2. The pension pots are not transferable so a youngster may have any number by the time he/she reaches middle age. Confusing? They will probably lose the will to live reading through interminable pages of bumpf.

    My guess is that opt out rates are going to be increasing over the next few years.

    On a broader note we can see evidence that pensions in general are the fly in the ointment, bith for firms and for employees. You only have to see the debacle of BHS and now Toys-Are-Us. There wouldn’t have been this trouble if employees got the benefit in salary and then made their own arrangements. A pension is a deferred benefit and if something goes wrong the employee loses out and the firm’s are very restricted often leading to closure – so no pension and no job. (Or the PPF takes it up and then there is more burden on solvent firms). Whichever way you want to cut it the rules – well intentioned as they may be – amply echo the well known phrase – “The road to hell is paved with good intentions”.

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