Morten Nilsson comments on DWP consultation on automatic enrolment earnings thresholds

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For immediate release: Wednesday 15 October 2014

Morten Nilsson, CEO of NOW: Pensions, comments on today’s announcement that the DWP will consult on the qualifying earnings trigger and qualifying earnings band for auto enrolment. “It’s good news that the DWP is acknowledging that aligning auto enrolment to income tax thresholds might not be the most sensible approach.

Since the introduction of auto enrolment, the tax-free personal allowance has crept up from £7,454 to £10,000 with a further increase to £10,500 scheduled for the 2015/2016 tax year.

One of the consequences of this is that more people have been unintentionally excluded from auto enrolment.

With both the Conservative party and Liberal Democrats stating at their recent party conferences that they will increase the tax free amount further – £12,500 by 2020 for the Conservatives and £11,000 by 2016 for the Liberal Democrats, the time for a review is ripe.

But, rather than tinkering with the earnings trigger our preference would be for all workers to be auto enrolled as soon as they start paying National Insurance and for contributions to be based on all salary rather than a band of earnings currently set by the DWP between £5,772 and £41,865.

Band earnings significantly erodes savers pension pots and disadvantages everyone – particularly penalising those on low incomes. The sad truth is, no saver actually gets an 8% contribution, the most anyone gets is 6.9% if they are at the top of the earnings band, with somebody earning £10,000 only receiving a total contribution of 3.4% which is woefully inadequate.

We urge the DWP to extend the scope of its consultation to include band earnings as well as the earnings trigger to ensure savers get a fairer deal.”

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For further information:

Amy Mankelow
NOW: Pensions
Tel: 020 3640 9075

Valentina Kristensen
Lansons Communications
Tel: +44 207 566 9720

Notes for editors:

NOW: Pensions


NOW: Pensions is an independent, multi-employer trust serving thousands of employers and hundreds of thousands of employees from a wide range of sectors.

A subsidiary of one of Europe’s largest pension funds, Danish pension scheme ATP, NOW: Pensions offers a simple and cost effective workplace pension solution direct to employers and via advisers and the payroll sector.

In April 2013, NOW: Pensions became the first master trust to attain the NAPF’s new PQM Ready Standard. The benchmark shows employers that NOW: Pensions is a well governed pension scheme with low charges and good member communications.

The NOW: Pension Trustee Directors, whose role is to safeguard the interests of members, comprises well-known industry figures with different areas of expertise:

  • Jocelyn Blackwell, founding partner Dunnett Shaw
  • Christopher Daykin, former Government Actuary
  • John Monks, member of House of Lords and former General Secretary of ETUC and TUC
  • Win Robbins, former Head of European Fixed Income at Barclays Global Investors
  • Nigel Waterson, former Shadow Pensions Minister

Charges are just £1.50 per month administration charge (reduced administration charge of £0.30 – £1.00 to be applied during auto enrolment phasing for lower earners) plus a 0.3% annual product investment management charge, with no hidden charges.

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