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Govt to freeze auto-enrolment earnings trigger

Retirement plan-pension-report

The government is set to freeze the auto-enrolment earnings trigger at £10,000 next year as it confirms a review of the flagship pensions policy will include how to bring more self-employed people into retirement saving.

The government estimates a £71m boost in pension savings from freezing the trigger, alongside increasing the lower earnings band from £5,824 to £5,876 and the upper earnings band from £43,000 to £45,000.

Employers are likely to contribute around £30m more while individuals are set to increase contributions by £31m as a result of the combined changes.

The Department for Work and Pensions expects a further £10m in tax relief to be offered on individual contributions.

In a series of documents on the success of auto-enrolment release today, DWP also confirms that its 2017 review of the policy will include how to bring more self-employed people into pension saving, as well as people with multiple jobs who do not meet the criteria for auto-enrolment.

DWP says it will review again the earnings trigger qualifying earning bands, as well as age eligibility, in the 2017 report.

automatic-enrolment-evaluation-report-2016-pdf

Currently, workers aged between 22 and state pension age earning above £10,000 who have an employment contract are automatically enrolled.

Pensions minister Richard Harrington had previously hinted he wanted to examine how to bring the self-employed into pension saving as part of its review into the success of auto-enrolment next year.

The government is set to appoint an advisory board to support the auto-enrolment review, with terms of reference to be published early next year.

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