Workplace pensions thresholds under automatic enrolment will remain at their current levels in 2023-24, as households balance saving for their future with day-to-day living costs.
This includes the earnings “trigger” at which employees are automatically placed into a workplace pension, which will remain at £10,000.
The lower earnings limit – the point from which earnings are used to calculate the amount of pension contributions that will be paid into a scheme – will also be kept at £6,240.
Employees earning between £6,240 and £10,000 are not automatically placed in a pension but they can opt in if they wish to do so.
A written statement by Pensions Minister Laura Trott said: “We want to ensure that our approach continues to enable individuals, for whom it makes economic sense, to save towards their pensions whilst also ensuring affordability for employers and taxpayers.
Keeping the earnings trigger where it is for the time being is a sensible move as the nation’s finances recalibrate to higher costs— Jon Greer, Quilter
“The review has concluded that all AE (automatic enrolment) thresholds for 2023-24 will be maintained at their 2022-23 levels.
“This is consistent with our ambitions to build a stronger, more inclusive savings culture. The Government are considering what more can be done to enable people to have greater financial security in retirement.”
Jon Greer, head of retirement policy at wealth manager Quilter, said the moves will have been carefully weighed by the Government as it needs to navigate the “delicate balance” between addressing financial pressures on low-income households and helping as many people as possible to save in a pension.
He said: “While saving for retirement is key, low-income workers must balance this need with hanging on to as much of their money as possible to stay afloat in this economic climate.”
Mr Greer added: “Keeping the earnings trigger where it is for the time being is a sensible move as the nation’s finances recalibrate to higher costs.”
He continued: “It is logical for the DWP (Department for Work and Pensions) to wait for household finances to be on a more stable footing before expanding this successful policy to help more people save for their retirement.”
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, said: “With budgets being squeezed like never before, people are making difficult financial decisions based on balancing saving for their future with meeting their day-to-day living costs.
“Any move to increase the amount going into a pension by actively reducing or removing earnings limits may be enough to tip people over the edge and opt out.
“However, it’s worth saying freezing the trigger and lower earnings limits will see more people being brought into auto-enrolment if they get a pay increase.”
