UK. Expanding auto-enrolment could cost employers more, experts warn
Proposed legislation expanding auto-enrolment pensions to include thousands more employees, including younger workers and lower earners, could lead to higher costs for employers, experts have warned.
A bill was introduced to Parliament yesterday (5 January) that would see the minimum age for auto-enrolment drop from 22 to 18, giving employees an extra four years of savings towards their pensions.
The proposal would also scrap the £10,000 minimum earning threshold that currently triggers automatic enrolment, meaning that all workers over 18 would be enrolled.
Think tank Onward, which supported the bill, estimated that lowering the auto-enrolment age would allow younger workers to save an additional £20,267 when they retire.
In a report published to coincide with the reading of the bill, Onward said that currently just one in five 16-21-year-olds has a workplace pension, making them five times less likely to have one than someone who is middle-aged.
But, while the expansion of auto-enrolment would be good news for savers, the bill could lead to higher costs for employers – who currently contribute at least 3 per cent towards employees’ pension savings.
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