Govt publishes AE private member’s bill ahead of second reading

The government has published MP Richard Holden’s private member’s bill on extending automatic enrolment (AE) ahead of its second reading in the House of Commons.

Despite recommendations contained in the research report from think tank Onward, which helped inform the bill, the bill does not propose removing the £10,000 earnings trigger.

The bill proposes extending AE to all jobholders aged at least 18 and removing the lower qualifying earnings threshold, although a timetable for lowering the lower qualifying earnings threshold was not included.

WTW senior consultant, David Robbins, pointed out the omission of the removal of the earnings trigger and the timetable for the reduction in the lower qualifying earnings threshold.

He stated: “Instead, the bill confines itself to the 2017 recommendations - make earnings pensionable from the first £1 where people are enrolled or opt in and lower the age threshold from 22 to 18.

“Keeping the earnings trigger recommendation makes some sense. It means not defaulting people who earn less than state pension into deferring income until retirement, though there may be a case for this where someone works part-time and has a partner earning more.

“It also reduces the extent to which employers will have to deduct, and pension providers administer, tiny contributions.”

Robbins added that, “perhaps more significantly”, the omissions make it more likely that the government could support the bill.

Furthermore, although the timetable for the reduction of the lower qualifying earnings threshold was not included, Robbins pointed out that, if the bill was passed, the government could use its existing power to review the qualifying earnings band each year to reduce the threshold in stages.

The bill, known as the Pensions (Extension of Automatic Enrolment) Bill, is due to have its second reading in the House of Commons tomorrow (25 February).

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