The government should immediately cut the current £10,000 auto-enrolment earnings trigger, according to the Nest members' panel.

In its annual report to the Secretary of State for Pensions, the panel has urged the government to fast forward its plans to abolish the trigger to enable lower-paid workers to start making contributions to a pension scheme.

Last December Pensions Minister Guy Opperman confirmed that the auto-enrolment earning threshold will stay frozen at £10,000 for 2019/20. The government also announced that the lower limit qualifying earning band would increase from £6,032 to £6,136 and that the upper limit would increase from £46,350 to £50,000.

The panel says that low paid workers are missing out on significant pension contributions and that the gap that will grow even further when contributions are paid from the first pound following the planned mid 2020s abolition of the bottom of the earnings band.

In the panel’s view, the gap between the two discriminates against those who work low paid or part-time jobs that pay less than £10,000, and those with more than one job who may have overall earnings above the trigger, but do not reach it in any one of their jobs.

It recommends that the earnings trigger be lowered because those excluded from auto-enrolment are predominantly women and that the increase in contributions now that phasing has completed, means they are missing out on significantly more than in previous years. It also argues that the introduction of contributions from the first pound will make it worthwhile for many more low-paid workers to be auto-enrolled, even on the logic of today’s system.

The chair of the Nest members’ panel, Nigel Stanley, said that collecting contributions from the first pound would be a real boost, but without a big reduction in the auto-enrolment trigger, millions of workers, who are mainly women, would miss out on even more.

“The Nest members’ panel is calling for a phased reduction in the earnings trigger to start now,” he said. “The government reviews and sets the trigger every year. Next time it should take it out of the deep freeze.”

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