The government has confirmed that auto-enrolment thresholds will be held at their current levels for the next year.
The decision was taken to “ensure the continued stability of the policy in light of the impact of Covid-19 and prevailing economic factors.”
According to research released by the Pensions Regulator, the total asset value of occupational DC schemes is currently £143bn. This is an increase of £29bn, or 26 per cent, from the previous year and 546 per cent since the start of 2012.
Occupational DC plans now have 26.3m participants, an increase of 1069 per cent since 2012. Since 2012, the average asset per membership has decreased by 66 per cent. Compared to £17,200 in 2012, they were £5,700 in January 2023.
Hargreaves Lansdown senior pensions and retirement analyst Helen Morrissey says: “Today’s statement will have come as no surprise given the enormous economic challenges people are facing. With budgets being squeezed like never before people are making difficult financial decisions based on balancing saving for their future with meeting their day-to-day living costs.
“Any move to increase the amount going into a pension by actively reducing or removing earnings limits may be enough to tip people over the edge and opt-out. However, it’s worth saying freezing the trigger and lower earnings limits will see more people being brought into auto-enrolment if they get a pay increase.
“Auto-enrolment has been an enormous success. Data published by the Pensions Regulator shows membership of DC schemes has soared an incredible 1069 per cent since it began.
“Aggregate assets have swelled but it is important to note that this is largely because more people are contributing – if we look at average assets per membership, they have gone down substantially though this could also be because we are seeing more people accumulate multiple pensions.
“It is clear there is more work to be done on auto-enrolment – we do need to find ways of getting people to contribute more and the government has come under pressure to outline a timetable for the introduction of the 2017 Auto-enrolment Review reforms which would certainly have a positive effect if they can be introduced at a point when this crisis has passed.”
The post Auto-enrolment thresholds to be held at current levels appeared first on Corporate Adviser.
