Blog

26/02/19
The annual review of the automatic enrolment earnings trigger and qualifying earnings band for 2019/20 has now been published. The Secretary of State does have some flexibility in the level to which the amounts for the earnings trigger and qualifying earnings band are set. There are 3 principles that are considered at each review:

1) Will the right people be brought in to pension saving? In particular, at what level will the earnings trigger bring in as many people as possible who will benefit from saving?
2) What is the appropriate minimum level of saving for people who are automatically enrolled? Everyone who is automatically enrolled should pay contributions on a meaningful portion of their income.
3) Are the costs and benefits to individuals and employers appropriately balanced?

Results of the review
Earnings Trigger
This will remain at £10,000. This represents a real terms decrease in the value of the trigger when combined with assumed wage growth and will bring in an additional 40,000 individuals into the target population.

Qualifying earnings band lower limit

The Secretary of State has decided to maintain the link with the National Insurance Contributions Lower Earnings Limit at its 2019/20 value of £6,136 by setting this as the value of the lower limit of the qualifying earnings band for 2019/20.

Qualifying earnings band upper limit

The upper limit of the qualifying earnings band caps mandatory employer contributions . National Insurance Contributions Upper Earnings Limit at its 2019/20 value of £50,000 is the factor that should determine the upper limit of the qualifying earnings band. Retaining the link between National Insurance Contribution levels and the qualifying earnings band limits, provides an important element of consistency for employers, the pensions industry and payroll services.

The relevant legislation will be laid in early 2019 giving effect to the new numbers.