Proposals to lower the auto-enrolment (AE) age limit from 22 to 18 and to remove the Lower Earnings Limit (LEL) have been put forward in a government review of the policy.
Analysis of the Automatic Enrolment Review 2017 Report revealed that, lowering the age limit to 18 would increase the number of people eligible for AE by 900,000 and increase annual pension savings by £770 million in 2020/21.
It also found that removing the LEL would create an additional £2.6 billion in annual pension savings through an additional £1 billion in employer contributions, £1.2 billion in employee contributions and £0.4 billion in income tax relief in 2020/21.
The combined additional pension savings associated with removing the LEL and lowering the age limit are just over £3.8 billion in 2020/21.
Although the figures are based on contribution levels at 2020/21, the government doesn’t intend to implement the proposed changes until the mid-2020s.
‘This will be subject to discussions with stakeholders around the detailed design in 2018/19, finding ways to make the changes affordable, and followed in due course by formal consultation with a view to introducing legislation,’ stated the report.
