Reducing AE earnings trigger to NI lower earnings limit would bring in 214,000 workers

A reduction in the auto-enrolment (AE) earnings trigger to £6,396 (the National Insurance lower earnings limit) would bring an additional 214,000 workers into scope, Pensions Minister, Guy Opperman, has stated.

In response to a parliamentary question, Opperman divulged that, in addition to drawing in more workers, the reduction in earnings trigger would increase contributions by £124m in 2022/23, compared to increasing the trigger by average earnings growth.

These figures come in response to a question from Conservative MP for North West Durham, Richard Holden, who enquired if the government would make an assessment of the increase in tax relief for part-time workers that would result from AE being extended to those earning under £10,000 a year, and what proportion of that amount would benefit men and women respectively.

Opperman responded by saying that, of the additional contributions, £8m would be through increased income tax relief.

Furthermore, 78 per cent of the additional contributions would benefit women and 22 per cent would benefit men, he noted.

This comes in the aftermath of the annual review of the AE earnings trigger, published on 8 February 2021, which reviewed the 2022/23 thresholds and discovered that by remaining at £10,000, an additional 17,000 workers would be brought into scope.

The decision to keep the earnings trigger at £10,000, according to the government, reflected the “key balance that needs to be struck between affordability for employers and individuals and the policy objective of giving those who are most able to save the opportunity to accrue a meaningful level of savings with which to use for their retirement.”

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