- In a written statement to Parliament, new pensions minister Torsten Bell confirmed the automatic enrolment earnings thresholds and earnings trigger of £10,000 will remain the same in 2025-26
- The lower level of qualifying earnings was increased to its current level of £6,240 in 2020-21, while the upper level has remained the same at £50,270 since 2021-22
- In 2023, legislation was passed to lower the minimum age for automatic enrolment from 22 to 18 and to remove the lower level of qualifying earnings
- A government review into pensions adequacy was shelved in December amid mounting concerns about loading extra costs onto employers following the Budget
Rachel Vahey, head of public policy at AJ Bell, comments:
“At a time when other tax and financial thresholds are frozen, it comes as no surprise that the government has chosen not to increase automatic enrolment thresholds in 2025-26. Indeed, Torsten Bell’s first act as pensions minister after his appointment last week was to confirm to Parliament that automatic enrolment qualifying earnings levels and the earnings trigger will remain the same next year.
“However, workers’ salaries are under no such paralysis. Instead, as wages continue to go up, more people could be missing out on valuable pension contributions on the part of their salary above £50,270.
“Employers do not have to pay pension contributions on any salary above £50,270 – the same level when the higher rate of income tax kicks in. But HMRC’s own stats show the number of higher rate taxpayers is expected to have increased by over 40% since 2020-21*. If these workers’ employer pension contributions cut off at £50,270, millions could be losing out on valuable money to fund their later life.
“The DWP’s annual check of the automatic enrolment thresholds has the whiff of a tick box exercise. Instead, we need a thorough review of whether people in the UK are saving enough for retirement. The government promised us this, but phase two of the pensions review appears to have been kicked into the long grass. It needs to pick this back up again, along with plans to put into action the changes already agreed to lower the auto-enrolment minimum age to 18 and count contributions on the first pound of salary upwards.
“Asking people and employers to put more towards pension saving is always going to be tough. But the longer Labour postpones addressing the crucial problem of pensions adequacy, the worse this problem is likely to become. If we are to help people enjoy a decent income in retirement, it’s something the government is going to need to get to grips with sooner rather than later.”
