What happens to employees' pensions if I buy the business they work for?
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Auto enrolment pension thresholds for 2024-25 will remain at current levels, with the initial earnings figure of £10,000 unchanged
The lower earnings limit of the qualifying earnings band will remain at £6,240, and the upper earnings limit will be £50,270, in line with the higher rate tax band.
Maintaining the trigger at £10,000 will see 15.8m employees eligible for auto enrolment pensions with total annual contributions of £76bn.
Since 2012 over 11m people have been enrolled into a pension and over 2.3m employers have contributed to work-based schemes.
The decision was confirmed in a written statement by pension minister Paul Maynard.
‘The main focus of this year’s annual review of the automatic enrolment earnings trigger and lower and upper earnings limits has been to ensure the continued stability of the policy in light of prevailing economic factors.
‘We want to ensure that our approach continues to enable individuals, for whom it makes economic sense, to save towards their pensions whilst also ensuring affordability for employers and taxpayers,’ Maynard said.
Automatic enrolment obliges employers to enrol all workers aged 22 to pension age into a qualifying workplace pension, provided that they ordinarily work in Great Britain and satisfy the age and earnings criteria. The minimum employer contribution is 3% of earnings, with staff paying 5%. Earnings include commission, bonus and overtime payments and employees are entitled to opt out of schemes.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: ‘Auto-enrolment thresholds remain frozen as the cost of living crisis retains a firm grip on people’s budgets. Auto-enrolment has been an enormous success, but care needs to be taken that only those who can afford to save into a pension do so.
‘It’s a tricky balance to strike – boosting pension saving is hugely important but it can’t be at the expense of someone’s overall financial resilience.’
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