Could potential changes to workplace pensions impact your payroll?
The Pensions (Extension of Automatic Enrolment) (No.2) Bill has now passed the second reading in the House of Lords, if passed it could mean some important changes for workplace pensions.
Since automatic enrolment was brought into force in 2012, we have seen a dramatic transformation to pension savings, with over 10.8 million employees being automatically enrolled into a workplace pension as of January 2023. However, there are still some gaps in coverage which has prompted the proposed changes.
Currently missing out are those aged 18 – 21 and part-time workers who are earning less than the current earnings threshold. Also, when considering the savings adequacy measure used by the Pensions Commission, there are still estimated to be around 12.5 million individuals under-saving for their retirement, who make up 38% of the working age population.
Plans put forward in the Bill are to lower the enrolment age to 18 (currently 22) and to remove the lower qualifying earnings band (currently £520.00 per month), meaning pensions will be calculated from £1.00 of earnings for anyone over the age of 18.
The aim of the proposed changes is to bring in a further 0.5 million individuals into saving £1 billion per year. Although it is not yet known when the policy changes being reviewed would be implemented, it is important to consider the additional costs which could be faced by both employers and employees, and plan accordingly.
Get in touch
If you think the proposed changes could impact your payroll and would like discuss further the measures you may need to put in place, get in touch with a member of our payroll team by emailing payroll@pmm.co.uk or call 01254 679131.
Full details of the Bill can be found here.
A comment to note that the article does not constitute personalised advice and that advice should be sought before taking any action.