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18 Dec 2017

Auto-enrolment to include workers aged 18-21

Work and Pensions Secretary David Gauke has revealed there are plans to extend automatic enrolment pension saving to younger workers.

Gauke told the BBC´s Andrew Marr Show on Sunday that there had been “greater saving for pensions” since auto-enrolment was introduced in October 2012, and ministers now want to extend the scheme to employees aged 18 and over.

Under the current rules, employers must enrol staff aged 22 and over who earn more than £10,000 into a pension.

“I think we will get more people into the habit of saving,” Gauke said.

He also acknowledged that the planned increases in contributions from next April “might put people off”, but noted that opt-out rates so far have been lower than people predicted.

Recent research from Aviva confirms that most employees plan to stay in their workplace pension scheme when contributions increase in 2018 and 2019.

A survey of more than 2,000 private sector employees, carried out by ICM for Aviva´s Working Lives Report, found that just 4% intend to opt-out when the minimum contributions go up.

At present, the minimum auto-enrolment contribution is 2% of qualifying earnings, with the employer and employee each paying 1%.

From April 2018, minimum contributions rise to a total of 5% — at least 2% from the employer and the remaining 3% from the employee. A year later, in April 2019, they increase again to 8% — 3% from the employer and 5% from the employee.

In a separate Aviva survey of 500 small, medium and large businesses in the UK, almost three quarters (73%) of employers agreed they had some kind of responsibility for helping their employees save for an adequate retirement.

Copyright © M2 Bespoke 2017

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