Interactive Investor

Auto-enrolment earnings' trigger kept at £10K

8th February 2022 13:12

Rebecca O'Connor from interactive investor

17,000 more workers to be brought into pension saving as government freezes earnings threshold.

The government has decided to freeze the earnings threshold for auto-enrolment at £10,000 for the 2022-23 tax year, which it says will mean 17,000 more workers will be brought into pension saving, as wages rise.

Becky O’Connor, Head of Pensions and Savings, interactive investor, said: “Wage rises will bring thousands more people into workplace pension savings in the next year as a result of the decision to freeze the auto-enrolment threshold at £10,000 - and that is a good thing.

“While pressure remains on the government to reduce the threshold to help people on low incomes build up retirement savings, there is also a need to balance this against day-to-day income needs now.

“Rises in the cost of living would make it hard to justify reducing the threshold currently and prioritising saving for the future rather than eating and heating now. At the same time, there are instances where people might have multiple sources of income, all below £10,000, so can afford to put some money into workplace pensions, but are not currently doing so.

“The government needs to consider ways of reaching people who can afford to make pension contributions and are not doing so because they do not currently reach the threshold for auto-enrolment.”

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