Govt confirms intent to explore AE reform

The Department for Work and Pensions (DWP) has confirmed that the government is exploring potential reforms to auto enrolment (AE), including abolishing the lower earnings limit for contributions and reducing the eligible age to 18.

Amid the 10-year anniversary of AE, the DWP highlighted recent figures as demonstration of the initiative’s success, with employees across the UK saving £114.6bn into their pensions in 2021, a real terms increase of £32.9bn compared to 2012, when AE was introduced.

Following the success of the first 10 years of the initiative, the DWP confirmed that the government intends to continue its work with employers and pension providers to further boost the amount of people in a workplace pension.

In particular, the DWP confirmed that the government is exploring how AE can go further to help more people save more, sooner, by abolishing the lower earnings limit for contributions and reducing the eligible age to 18.

It is also continuing work to empower savers, via new products such as pensions dashboards and Mid Life MOTs.

The government has repeatedly committed to a mid-2020s timeline for the reforms amid growing calls for action from the industry, with MPs also recently urging the government to boost saving rates “before it is too late” and to introduce legislation for the 2017 AE reforms “no later than the beginning of the next session of parliament”.

Commenting on the anniversary of AE, Pensions Minister, Laura Trott, stated: “Automatic enrolment has completely transformed how people save – with staggering results.

"In the 10 years since its introduction, 10.7 million people have started saving for their pensions with this easy-to-use scheme. We have also seen a huge and much needed increase in women and young people being enrolled into a pension.

“Automatic enrolment is doing its job – helping more people save more so they can do more in retirement."

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