Pensions Minister Freezes Workplace Pension Auto Enrolment Levels
Published / Last Updated on 21/01/2025
New Pensions Minister Torsten Bell has confirmed that thresholds for automatic enrolment of employees into workplace pensions will stay at 2024/25 levels for tax year 2025/26.
This means that the earnings limits will remain as follows:
- £10,000 pa Earnings Threshold where employees must be automatically enrolled in the employer’s workplace pension. Employees can opt out of they choose but this is not advisable to give up ‘free’ employer pension contributions.
- £6,240 pa Lower Earnings Limit – the level at which you pay 5% (4% of earnings + 1% tax relief) of threshold earnings and your employer pays 3%.
- £6,240 pa is also the limit that employees the earn above but are still below £10,000 pa can request to be enrolled and cannot be refused.
- £50,270 pa Upper Earnings Limit – the level of earnings at which both you and your employer do not legally have to contribute 5% and 3% respectively but you can voluntarily if you wish.
The Pensions (Extension of Automatic Enrolment) Act 2023 became law on 18 September 2023
- Changes the minimum age of qualification from age 22 to age 18.
- Removes the lower earnings threshold of £6,240 down to £0 meaning all employee earnings up to £50,270 qualify for contributions.
- A date has yet to be set for these changes to be implemented due to increased pressure on employers with the increase to employers’ national insurance contributions to 15% from April 2025 with the Employers Secondary Earnings Threshold (point at which employers pay NIC) reduced from £9,100 pa to just £5,000 pa on employee earnings.
Comment
Government pension strategy is in tatters. The government refusing to honour WASPI women and state pension age increase compensation, delays to the 2nd part of the Government’s review on pensions and many arguments on DWP miscalculations of State Pension Benefits, in particular for widows, still ongoing. It is no surprise that the Pensions Minister has left workplace pension thresholds unchanged, as they have been since 2019/20.