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Labour eyes auto-enrolment earnings trigger cut

Labour plans to cut the automatic enrolment earnings trigger from £10,000 in a bid to bring an extra 1.5 million into workplace saving.

Under current rules only people earning above the national insurance threshold – currently set at £10,000 – qualify for auto-enrolment.

In a speech in London this morning, Labour shadow work and pensions secretary Rachel Reeves said the party plans to lower this figure to boost auto-enrolment participation rates.

She suggested the limit should be reduced to the national insurance lower earnings limit of £5,773 – the figure proposed by the Turner Commission in 2005.

Reeves said: “The Government’s roll back of auto-enrolment’s coverage is yet another way in which they are letting low paid women a drip, drip of policies that are making life harder for women paying the highest price for their policy choices and bearing the brunt of their failure to get our economy working for everyone.

“When it comes to the auto-enrolment threshold, the Government say that people with low earnings would save too little for it to be worthwhile and this is the basis of Steve Webb’s argument today that joining a workplace pension scheme “would not be the right option” for people in this position.

“I have to say it is quite a state of affairs when we have a pensions minister who says that 1.5 million low paid workers should not be saving for a pension.”

Labour estimates the change will cost around £20m a year in additional tax relief.

The Association of British Insurers has backed Labour’s proposal.

ABI head of savings, retirement and social care Yvonne Braun says: “Automatic enrolment into workplace pensions has been a huge success so far with millions more people saving for their retirement.

“Workers earning more than the lower earnings threshold but less than £10,000 a year currently have to make an active decision to join their employer’s pension scheme and are not automatically enrolled. These proposals extend the benefits of automatic enrolment to lower paid workers and would help build a stronger savings culture across our society.

“Any changes would need consultation to ensure they could be implemented with minimum unnecessary cost to scheme administrators and employers.”

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