Pension AE changes on the way – but when?

Private Members’ Bill to help millions save more into their pension and start saving sooner has cleared Parliament and been granted Royal Assent

  • The Bill introduces powers to reduce the age for automatic enrolment and starts pension saving from the first pound earned.
  • Since 2012, Automatic Enrolment has transformed pension saving, with around 11 million enrolled.

Millions of people, including low earners and younger workers, will be helped to save more into their pension and look after their financial futures as a Private Members’ Bill completed its passage through Parliament and received Royal Assent.

The Bill, introduced in the House of Commons by Jonathan Gullis MP and taken through the House of Lords by Baroness Altmann, creates powers to scrap the lower earnings limit and reduce the age for Automatic Enrolment, the landmark pensions policy which sees eligible employees made members of their workplace pension scheme without needing to ask.

The changes to Automatic Enrolment, combined with the Mansion House Reforms announced by the Chancellor in July, could see the average earner’s pension increase by nearly 50% if saving across their entire career, while a minimum wage earner could see their pension pot increase by over 85%.

Claimed to Benefit savers and society – the reforms will unlock investment into pioneering UK businesses, grow the economy, and help the record number of people saving into a pension to achieve the retirement they want.

Secretary of State for Work and Pensions Mel Stride:

Thanks to Automatic Enrolment, we are empowering a record number of British workers to invest in their financial futures – with an additional £33 billion saved in 2021 compared to 2012.

This Bill will mean millions across the country can save more and save earlier – boosting security in older age and helping people achieve the retirements they’ve worked so hard for.

Jonathan Gullis MP:

I am delighted that the Pensions (Extension of Automatic Enrolment) Bill has received Royal Assent. Auto-enrolment is a significant step forward and will dramatically improve financial resilience in retirement for young people, women and lower earners.

Nearly 25% of people in Stoke-on-Trent North, Kidsgrove and Talke are not yet auto-enrolled on a pension plan, and this piece of legislation will ensure part-time, women, apprentices and young people have financial stability in the long-term.

Before the introduction of Automatic Enrolment in 2012, just 55% of eligible employees saved into a workplace pension. By 2021 this had risen to 88%, with an additional £33 billion saved in real terms in 2021 compared to 2012.

Automatic Enrolment has particularly benefitted women, young people and lower earners – once poorly served or excluded from workplace pensions. The proportion of eligible women in a workplace pension has increased from 59% in 2012 to 89% in 2021, while the proportion of eligible 22 to 29-year-olds has more than doubled – from 35% in 2012 to 86% in 2021.

Minister for Pensions Laura Trott:

Automatic enrolment has been a phenomenal success, and we are determined to go further. It’s great news that the Private Members’ Bill has successfully passed through Parliament and received Royal Assent.

This will mean younger workers and those in lower paid employment will be able to fully participate in Automatic Enrolment. For the first time, every eligible worker will benefit from an employer contribution from the first pound earned – which will make a huge difference to their eventual pension.

James Goodman, Tesco UK People Director:

We know it’s important that colleagues save for their retirement and Tesco Stores already offers the option of a retirement savings plan for all our colleagues from the age of 16, regardless of how much they earn. We match their contributions up to 7.5% of their salary and the vast majority of colleagues stay in our scheme once they have joined.

We welcome the government’s intention to reduce the age that colleagues will be automatically enrolled into pension schemes and believe that this will help younger people to get into the savings habit.

Pensions saving rates have increased in all corners of the country. The largest increase in private sector participation rates has been in the West Midlands, rising from 39% in 2012 to 87% in 2021.

Lowering the age at which eligible workers must be automatically enrolled into a pension scheme by their employers from 22 to 18 will make saving the norm for young adults and enable them to begin to save from the start of their working lives.

The Department for Work and Pensions (DWP) will launch a consultation on implementing the new measures.

Pensions into the future

The introduction of Automatic Enrolment in 2012 turned the tide on the number of people saving for their retirement, with over 10.9 million people being automatically enrolled since 2012.

The reforms being brought forward by the Government – including changes to Automatic Enrolment – could see the average earner’s pension increase by nearly 50% if saving across their entire career and a minimum wage earner could see their pension pot increase by over 85% if saving across their entire career: Chancellor’s Mansion House Reforms to boost typical pension by over £1,000 a year – GOV.UK (


The Bill includes a statutory requirement to consult on the implementation approach and timing, along with reporting on the outcomes to Parliament. This will help ensure the strong consensus that underpins the success of Automatic Enrolment is maintained.

So what is likely for April 2024?

Subject to future announcement and confirmation, with these proposed changes going through a period of consultation and planning which will result in pension scheme rule changes, and requirements to update software, the likely position for April 2024 is the thresholds and triggers remaining frozen.

PAYadvice.UK 20/9/2023

Leave a Reply