A topic covered on the monthly Wages Wednesdays is the future changes that employers and payroll providers will need to familiarise themselves with regarding Auto-Enrolment.
The previous UK Government published its ‘Automatic enrolment review 2017: Maintaining the momentum’ document in 2017 that proposed three changes, all concerned with widening the scope of Auto-Enrolment, bringing more workers on board and increasing minimum contribution levels:
1. Lower the age criterion from 22 to 18;
2. Removing the Lower Qualifying Earnings Band (currently £6,240) so that contributions are payable from the first £1 or earnings; and
3. Reviewing the 8% minimum contribution percentage
All of this would be subject to consultation with the intention that implementation would start in the mid-2020s. This was confirmed in Parliament on 25 February 2022 and in a 10 November 2022 Press Release.
The Legislation
There are two pieces of legislation in place that will allow this to happen without the need for inclusion in a Pensions Bill:
21 July 2025 Announcements
On 21 July 2025, the current UK Government issued a Press Release announcing the resurrection of the Pensions Commission. This was originally established in 2002 and last met in 2006 but was considered highly influential in the UK's pension sector. For example, the most significant reforms are considered the shaping of Auto-Enrolment itself and the reduction in the number of Qualifying Years needed for entitlement to a full Basic State Pension (from 44 for men and 39 for women to 30 for both men and women). Note that this does not apply for full entitlement to the New State Pension which requires 35 Qualifying Years.
The Press Release recognises that not enough people are saving for their retirement, though this was recognised back in 2017 and, perhaps, the catalyst for the above legislation. Significant from the Press Release, though, is that their report, due in 2027, will ‘make proposals for change beyond the current parliament’.
In short, the revived Pensions Commission will report on approaches to increasing savings rates among young people, lower-income earners, women, and the self-employed. One option is to implement changes at an age earlier than the current threshold of 22. However, there will not be any changes in this Parliamentary Session, due to end in 2029.
For Bookkeepers
It is good to know that there will not be Auto-Enrolment changes before 2029, something that would be both an administration and financial cost for employers. Although, it does seem that the revised Pensions Commission is revisiting ground that has already been trodden before (in 2017).
