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Employee Benefits News

Latest News
17 Dec 2012

Over 400,000 To Miss Out On Auto-Enrolment After DWP Raises Trigger

Some 420,000 individuals will be excluded from automatic enrolment after the Department for Work and Pensions (DWP) last week announced its decision to lift the earnings trigger to £9,440 in 2013/14.

As many as 320,000, or 76%, of those affected by the change are estimated to be women. This reflects the fact that women are more likely to work part-time or have lower earnings than men.

The auto-enrolment trigger will be raised from £8,105 previously in order to remain in line with the personal allowance. Those who are not auto-enrolled because of the higher earnings trigger will still have the right to opt in with an employer contribution, with employers to provide information on these rights.

In addition, the lower limit of the qualifying earnings band was set at £5,668, up from £5,564 in 2012/13. The difference between the auto-enrolment trigger and the minimum contributions threshold for money purchase schemes creates a de-minimis mechanism, which helps those who are auto-enrolled to pay contributions on a meaningful portion of their income. The new lower limit raises the overall minimum contribution from about £4 to around £6 a month.

The upper limit for 2013/14 will be £41,450, down from £42,475 in the current year. The change reflects the National Insurance upper earnings limit for the coming year and delivers payroll alignment, according to the DWP. It was estimated that some 167,000 people between 22 and state pension age earn between £41,450 and £42,475, of whom 60% are already part of a workplace pension scheme.

The new rates are due to come into effect next April.

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