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Govt to raise auto-enrol upper limit and freeze £10k trigger


A move to raise the upper limit of the automatic enrolment savings band will boost pension savings by £23m.

In analysis published today the Department for Work and Pensions says moving the upper limit of the qualifying earnings band to £43,000 in 2016/17 means pension savings will be £2.4bn, £23m higher than if the thresholds had remained at the 2015/16 level.

Higher employer contributions account for £12m, individuals will contribute £9m more while £3m will come in extra tax relief.

The lower limit of qualifying earnings will remain at £5,824.

The DWP proposed to move the thresholds in line with the National Insurance Contributions upper and lower earnings limit.

The auto-enrolment trigger will remain at £10,000, meaning people earning below that figure will not receive contributions.

In addition, the Government restated a warning that around 180,000 workers earning between £10,000 and £11,000 will miss out on 20 per cent tax relief if their scheme uses the ‘net pay’ model.

However, it says it will not take any action until the outcome of the Treasury’s consultation on tax relief is known.

It says: “Small and micro employers should ask their provider about the tax implications before making a decision on the scheme they choose. The Pensions Regulator has published information online for employers on how to obtain tax relief and the implications for staff depending on the method used.

“However, the Government is committed to keeping the matter under close review particularly in the light of the outcome of HM Treasury’s recent consultation on pensions tax relief.

“Automatic enrolment is now entering a crucial stage in the roll out of this major reform and it is not considered to be the right time to make significant changes to the existing framework.”



MPs launch auto-enrolment inquiry

An influential committee of MPs has today launched an inquiry into automatic enrolment, focusing on how the reforms affect smaller employers. The Work and Pensions committee has requested written evidence on the implementation of auto-enrolment and the impact it will have on small and micro employers. The committee will focus its inquiry on the suitability […]


Stranded: Govt urged to bring self-employed into auto-enrolment

Pensions experts are calling on the Government to avert a savings disaster by bringing self-employed workers into automatic enrolment. The reforms require every employer to enrol staff in workplace pensions by 2018 but exclude people earning less than £10,000, the under-22s, those over state pension age, and people without an employer. At the same time, […]


Pension tax relief reform ‘will solve auto-enrol net pay problem’

Providers operating “net pay” automatic enrolment schemes will be forced to abandon the model, which denies low earners tax relief, if the Government presses ahead with radical reform to pension tax incentives. Since 2001, non-taxpayers have been able to claim tax relief on pension contributions. However, if schemes use the net pay model of paying […]

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(Another) downhill stroll — retirement planning

A report published this morning by the CIPD (CIPD Employee Outlook March 2015) provides yet more interesting data to the changing landscape of retirement planning. It should be remembered that we are in a period of genuine flux here given that the default retirement age was scrapped three years ago, and new pension freedoms come online in April. Both of these alterations will have a huge impact on how employees plan for their retirement.


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There is one comment at the moment, we would love to hear your opinion too.

  1. How transparent. Well it’s one way to make the figures look better.

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