Statement from Government
Many brits are already enrolled into a pension through their job automatically, and now thousands more workers will start saving for their retirement next year. Guy Opperman, The UK’s Secretary of State for Pensions, announced in a statement given to the house of commons that the automatic enrolment thresholds and earnings triggers for 2022/23 will remain as it. As a result, a further 17,000 will be put on the scheme from April because of rising wages over the next year. Employees will be auto-enrolled into a workplace pension if they earn over £10,000 a year are aged over 22 but below state pension age. The £10,000 earnings threshold will stay the same for the 2022-23 tax year.
Automatic Enrolment (AE)
AE obliges employers to enrol all workers into a qualifying workplace pension, provided that they ordinarily work in Great Britain and satisfy the age and earnings criteria. Enrolled employees and their employers must pay at least the minimum contribution levels. The endeavours have already been a considerable success as Opperman stated;
“Automatic Enrolment into workplace pensions (AE) has been a huge success to date. Since its introduction in 2012, over 10 million people have been automatically enrolled, and savings by eligible employees has increased by £28.4 billion.“
This means that the minimum earnings level for automatic enrolment into a workplace pension scheme will remain at £10,000 for 2022/23, while the lower earnings limit has been frozen for the first time. As a result, thousands more savers will be automatically placed into workplace pensions, as auto-enrolment’s earnings trigger remain frozen for the coming financial year.
In a bid to encourage individuals to save towards their pensions whilst ensuring affordability, an annual review of the scheme elected for a new approach so that anyone who is automatically enrolled will continue to pay contributions on a meaningful proportion of their salary. The yearly review has concluded to freeze all thresholds for 2022/23 at 2021/22 level:
• The Automatic Enrolment earnings trigger will remain at £10,000.
• The lower earnings limit of the qualifying earnings band will remain at £6,240.
• The upper earnings limit of the qualifying earnings band will remain at £50,270.
The British Government is still considering what more can be done to enable people to have greater financial security in retirement, but this is undoubtedly a great start. Worthwhile payroll software will provide a suitable solution for those struggling to get underway with this. Further clarity on any pension-related questions can be found with the Pension Regulator.
Documents detailing the process behind the decision have been made for public perusal on GOV.UK.