The age at which people are automatically enrolled into a workplace pension is expected to lowered from 22 to 18 if the Auto-enrolment Bill gets Royal Assent this month.
It is widely expected that will happen before Parliament is again dissolved for the conference season. As well as lowering the AE age threshold this Bill will also ensure contributions are based on the first pound of earnings, removing the salary offset of £6,240.
Aegon’s head of pensions Kate Smith says: “We are expecting that once the Bill is enacted, this will be swiftly followed by a consultation paper. This paper will set out implementation options for the enhancements, and is expected to be on a phased basis.”
She adds: “Removing the salary offset will have the dual benefit of increasing contributions from both employees and employers, and younger employees can start saving earlier which should lead to larger pension pots in later life.”
Smith says that there could be further pension changes announced this Autumn. “The political parties conference season starts in mid-September, running to mid-October. This could be the last conference season before the next UK general election, expected to be late 2024, possibly early 2025. We expect to hear the political parties thrash out what could end up forming their manifestoes – such as the future of the State Pension triple lock and pension tax. More specifically, all eyes will be on the Labour Party’s intentions around reinstating the lifetime allowance, as they previously announced.”
She adds that there will be a King’s Speech in November, setting out the government’s programme of legislation for this next session of Parliament, which could the be the last one before a General Election. This could include legislation enabling the government’s pension priorities, such as introducing the value for money framework.
The Autumn Statement – usually in late November – is likely to include details of tax and spending commitments, including the uprating of the state pension in April. This is likely to be increased significantly again, with earnings figures for July — published tomorrow — giving a key indication of how it might be uprated. These earnings figures are expected to be higher than September’s inflation figures, which are also taken into considering when setting the pension using the triple lock.
