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DWP cuts 420,000 from auto-enrolment with trigger changes

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DWP cuts 420,000 from auto-enrolment with trigger changes

The earnings trigger for auto-enrolment has been raised to £9,440, excluding 420,000 individuals from auto-enrolment.

Following a consultation the Department for Work and Pensions (DWP) has raised the value of the automatic enrolment trigger from £8,105 to £9,440 for the year 2013-14.

It has been done to keep the earnings trigger in line with the personal allowance.

The lower limit of the qualifying earnings band is £5,668 and £41,450 will be the upper limit of the qualifying earnings band.

The DWP said the measure would exclude around 420,000 individuals, of whom 76% are women.

Tom McPhail, Hargreaves Lansdown head of pensions research, criticised the move. He said the change to the trigger adds to other rises since 2006 when the trigger was set at £5,035, meaning that around one million people originally intended to be auto-enrolled now will not be.

‘Many employers will welcome this news. It will reduce their overall pensions bill, it keeps their administration simple and it takes more of their lower paid employees out of the system. Unfortunately it will mean that hundreds of thousands more workers will miss out on the opportunity to build a good retirement pot and because most of them are women it will exacerbate inequalities in the pension system.’

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