Figures over £1,000m are rounded to the nearest £10 million. They therefore may not sum exactly. Within the review of the automatic enrolment earnings trigger and qualifying earnings band for 2020/21 the Secretary of State has some flexibility in the level to which the amounts for the earnings trigger and qualifying earnings band are set[footnote 2]. Figures over £1,000m are rounded to the nearest £10 million and figures below are rounded to the nearest £1 million to reflect uncertainties associated with the modelling used. Unlike the earnings trigger, the LEL does not impact the number of people who are eligible for AE target group and as such, population effects are not included. Automatic enrolment (AE) obliges employers to enrol all workers who ordinarily work in Great Britain and who satisfy age and earnings criteria into a qualifying workplace pension and pay at least the minimum level of contributions. This survey does not have data on pension contributions, so it cannot identify whether one has a pension or not. The methodology outlined above looks only at those eligible to be automatically enrolled. This publication is available at https://www.gov.uk/government/publications/automatic-enrolment-review-of-the-earnings-trigger-and-qualifying-earnings-band-for-202021/review-of-the-automatic-enrolment-earnings-trigger-and-qualifying-earnings-band-for-202021-supporting-analysis. Quarter 3 2019 is used to be consistent with how tax thresholds are uprated when using CPI. The baseline thresholds are the 2020/21 AE thresholds uprated in line with the OBR’s earnings growth forecasts. Because women are over-represented in the newly eligible group, there is a marginal change in the demographics of the AE eligible population as a result of the threshold changes. Aligning the lower limit of the qualifying earnings band with the National Insurance lower earnings limit of £6,240 represents a slight decrease against the baseline threshold, so it results in an increase in pension saving by around £24 million when compared to the baseline scenario. 4. Broadly, we model three different types of options for each threshold for comparison against the baseline. The Secretary of State has considered all review factors against the analytical evidence and has decided to maintain the link with the National Insurance contributions lower earnings limit at its 2020/21 value of £6,240 by setting this as the value of the lower limit of the qualifying earnings band for 2020/21. 8. By 2020/21, we estimate here that there will be an extra £19.4 billion of workplace pension saving per year as a result of automatic enrolment, before the impact of threshold changes is taken into account. Automatic enrolment has been introduced gradually and is now in force for all employers and eligible workers. Table 6 shows the impact on employers, individuals and government associated with the baseline upper earnings limit and various options considered for its value in 2020/21, where these changes are made in isolation. The earnings trigger and the qualifying earnings bands are often jointly referred to as the automatic enrolment earnings thresholds. The Secretary of State has considered the latest analytical evidence and the policy objectives and has concluded that the existing threshold of £10,000 remains the correct level at this point in the establishment of automatic enrolment and will not change for 2020/21. Scenarios after the baseline present the change in costs when compared to the baseline. The baseline thresholds for 2020/21 are the 2019/20 thresholds uprated in line with forecast earnings growth. They are slightly better represented in the newly eligible group, at 14%. The current (2019/20) and proposed (2020/21) automatic enrolment thresholds are displayed in Table 1. The ‘Uprate by price inflation’ effect is calculated by uprating the 2019/20 annual rate by also using quarter 3 2019 CPI and rounding to the nearest £1. A person's qualifying earnings from an employment are their gross earnings in the qualifying earnings band in any pay reference period. The CPI measure of inflation was 1.4% in quarter 4 2019. The Secretary of State has concluded that mandatory employer contributions should still be capped and decided that the National Insurance contributions upper earnings limit at its 2020/21 value of £50,000 is the factor that should determine the upper limit of the qualifying earnings band. (i) retaining the 2019/20 automatic enrolment earnings trigger (£10,000), (ii) aligning the LEL with the 2020/21 National Insurance lower earnings limit (£6,240) and, (iii) aligning the UEL with the 2020/21 National Insurance upper earnings limit (£50,000). We account for evidence which suggests that some employers contribute on a band of earnings between £0 and the UEL, rather than the LEL and the UEL, contribution rates for employers and employees, where the minimum for a qualifying pension scheme in 2020/21 is 8% total contributions (including tax relief) on relevant earnings, of which at least 3% is from the employer. The Secretary of State remains of the view that voluntary opt-in provides the most appropriate option for those earning less than the earnings trigger who wish to save. Millions of workers are being automatically enrolled into a workplace pension by their employer. The Secretary of State has also assessed the equality impacts associated with this decision which are detailed later in this report. The automatic enrolment earnings trigger determines who is eligible to be automatically enrolled into a workplace pension by their employer in terms of how much they earn. The first 2 annual reviews established 3 principles to be used when reviewing the automatic enrolment thresholds. Conversely, women make up a much larger percentage of people earning below the equivalent of £10,000. And what are the equality implications of the different options? They therefore may not sum exactly. You are free to choose a more generous pension but contributions can't be below a minimum percentage of Qualifying Earnings (QE). The CPI measure of inflation was 1.8% in quarter 3 2019. Find out how pensions auto-enrolment works, when you'll be enrolled and how much you contribute. If your pay changes throughout the year, your employer may decide to review your contribution rate at that time, rather than wait until the following April. This represented an increase of £7.0 billion on 2017/18[footnote 12]. Volumes of savers in the eligible target group are rounded to the nearest 10,000. It is a statutory requirement that the Secretary of State reviews all 3 thresholds in each tax year. Employer plus employee contributions with tax relief must total at least 8% of QE. These volumes are informed by HMRC Pay As You Earn data and consistent with The Pension Regulator’s estimates, estimates of the bands of earnings on which individuals are making pension contributions, based on 2018 ASHE data. Built specifically for auto-enrolment. 6. To use the above figures, choose the option 'Minimum Pension for Auto Enrolment (RAS)'. But if you’re younger, as long as you’re earning £6,240 or more (in tax year 2020-21), you can still opt in and benefit from extra money from your employer. As in previous years, the changes under consideration for the 2020/21 review are not expected to particularly affect individuals according to their marital status, sexual orientation, gender identity, religion or belief. Impacts are calculated by comparing a modelled baseline scenario in 2020/21 against one where changes to the 2020/21 thresholds are made. 1. They are also less likely to work full time and more likely to work part-time[footnote 15]. Table 5 shows the impact on employers, individuals and government associated with the baseline thresholds and various options considered for the value of the 2020/21 qualifying earnings band lower limit. This longer term policy direction does not pre-empt this year’s or any future annual thresholds review, pending the introduction of legislation which would need to be enacted to remove the lower earnings limit of the qualifying earnings band[footnote 4]. Don’t include personal or financial information like your National Insurance number or credit card details. I understand the age tax allowance will be reduced if your income is £19500 in a year. 5. All content is available under the Open Government Licence v3.0, except where otherwise stated, Automatic enrolment in workplace pensions, Automatic enrolment: review of the earnings trigger and qualifying earnings band for 2020/21, Annex A – Equalities impacts on affected groups, nationalarchives.gov.uk/doc/open-government-licence/version/3, www.gov.uk/government/organisations/department-for-work-pensions, www.thepensionsregulator.gov.uk/doc-library/research-analysis, http://www.legislation.gov.uk/ukpga/2011/19/contents/enacted, https://www.gov.uk/government/publications/automatic-enrolment-review-2017-maintaining-the-momentum, www.ons.gov.uk/ons/taxonomy/index.html?nscl=Annual+Earnings, https://www.gov.uk/government/publications/employers-pension-provision-survey-2017, https://www.gov.uk/government/statistics/workplace-pension-participation-and-saving-trends-2008-to-2018, https://www.thepensionsregulator.gov.uk/en/business-advisers/automatic-enrolment-guide-for-business-advisers/6-choosing-a-pension-scheme/what-to-consider-when-choosing-a-scheme#d9567402515148d9a1e35201574bc728, https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/bulletins/genderpaygapintheuk/2019, https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/january2020, Coronavirus (COVID-19): guidance and support, Transparency and freedom of information releases, Current trigger (2019/20) uprated by earnings inflation, Uprate by estimate earnings inflation (baseline), the percentage of employers who indicated that they behaved in that way, and, the appropriate tax rate, either employer. 5. The auto enrolment minimum is initially 2% of which at least 1% must be paid by the employer, over time this increases to a total of 8% of which at least 3% must be paid by the employer. This would decrease total pension saving by approximately £89m against the baseline scenario. Don’t worry we won’t send you spam or share your email address with anyone. Auto-Enrolment Thresholds 2020/21 in Great Britain 12 March 2020 • On 27 February 2019, the Department for Work and Pensions (DWP) produced their ‘Review of the automatic enrolment earnings trigger and qualifying earnings bands for 2020/21’ supporting analysis. Contributions and funding Further information on funding, with key points for employers going through automatic enrolment. ↩, Workplace Pensions Participation and Saving Trends 2008 to 2018 https://www.gov.uk/government/statistics/workplace-pension-participation-and-saving-trends-2008-to-2018 ↩, https://www.thepensionsregulator.gov.uk/en/business-advisers/automatic-enrolment-guide-for-business-advisers/6-choosing-a-pension-scheme/what-to-consider-when-choosing-a-scheme#d9567402515148d9a1e35201574bc728 ↩, See analysis of the pay differences between men and women published by the Office of National Statistics: https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/bulletins/genderpaygapintheuk/2019 ↩, See ONS statistics: https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/january2020 ↩. Employers can meet these rules in different ways, such as paying the whole 8% themselves. To ensure this, we need to maintain an appropriate gap between the lower limit of the qualifying earnings band and the earnings trigger. Jack earns £110 for one week. The eligible population increases because some people’s earnings will increase to take them above the £10,000 trigger in 2020/21. Finally, estimates of the equalities impacts of different thresholds are produced using 2018 ASHE data and the 2018/19[footnote 8] Labour Force Survey (LFS). Table 2 compares the pension contributions under the baseline thresholds in 2019/20 and 2020/21, showing a £668 million increase in pension saving. Automatic enrolment changed this. Volumes of savers in the eligible target group are rounded to the nearest 10,000. There is also a qualifying earnings band in respect of which contributions are made – the band is defined by th… This group are not included within this modelling. The newly eligible group appear to be a little older on average than the previously eligible, with an average age of 41. Sets out the required criteria for a pension scheme to be an automatic enrolment scheme and / or a qualifying scheme. It is estimated by multiplying total pensions contributions from individuals by the appropriate income tax rates[footnote 6]. Increasing the UEL increases total pension saving, because it increases the amount of income on which employers and employees pay contributions. To date, it has not been possible to identify any straightforward or proportionate means to align the effects of the net pay and relief at source mechanisms more closely for this population. ↩, The LFS does not collect data on employer contributions to pensions so it is not possible to produce analysis for the eligible target population. More than £10,000 per year, you must auto-enrol them in your workplace pension and both you and they must contribute. Automatic enrolment earnings bands All employers will need to know the earnings bands that apply for 2020/21 for the purposes of automatic enrolment under the Pensions Act 2008. As an employee you have to pay in at least 5% of your annual ‘qualifying earnings’, which includes 1% tax relief from HMRC. Employer plus employee contributions with tax relief must total at least 8% of QE. The CPI measure of inflation was 1.8% in quarter 3 2019. 5. They therefore may not sum exactly. This assumption has a minimal impact on the aggregated estimates present, although the distinction is important for a small group of individuals. 1. Table 7 shows that approximately 37% of the eligible group under the baseline are women. Caution should be exercised in interpreting the figures presented. Other enquiries about the content of this document should be directed to: Latest “Automatic enrolment declaration of compliance” report can be found at www.thepensionsregulator.gov.uk/doc-library/research-analysis ↩, ‘The purposes of subsection (1) the Secretary of State may take into account any of the factors specified in subsection (4) (as well as any others that the Secretary of State thinks relevant). Freezing the threshold at £10,000 increases the number of individuals who are in the automatic enrolment target population by approximately 80,000 people. For the 2020/2021 tax year, this range is between £6,240 and £50,000 a year (£520 and £4,167 a month, or £120 and £962 a week). The Pensions Regulator (TPR) provides guidance to employers on choosing a pension scheme for their staff in order to discharge their statutory obligations under automatic enrolment. They are: 1. freezing the thresholds at their 2019/20 level, 2. setting the thresholds in line with relevant 2020/21 National Insurance or tax thresholds, 3. uprating the 2019/20 thresholds by a relevant index (for example, earnings, consumer price index (CPI) etc). Three quarters of those who will become eligible for automatic enrolment will be women, as their incomes grow above £10,000 between 2019/20 and 2020/21. 5. Whilst decisions are made for this year and the government can set out policy objectives and the principles that should inform the setting of the thresholds, it cannot pre-determine the approach for future years, consistent with current legislation. mse launches energy market game-changer – the uk's first auto compare-and-switch service NS&I TO SLASH SAVINGS RATES AND PREMIUM BOND PRIZES 10 January 2010 at 6:37PM edited 30 November -1 at 1:00AM in Water Bills 2. Appendix A: The phasing in of contribution levels. Automatic pension benefits for the employed. 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