From 18 £5.8K THRESHOLD ALSO DITCHED
A SHAKE-UP of workplace pensions will see 18-year-olds auto-enrolled for the first time.
The move will add another 900,000 young savers to the nine million who already have pension contributions automatically deducted from wages.
And in another change, every pound earned will go towards providing a pension in retirement – meaning the £ 5,867 threshold before employer contributions and tax relief kick in will be axed.
Work and Pensions Secretary David Gauke said: “This will see more people than ever helped on to the path to building a secure retirement.”
At present, autoenrolment applies to 22 and overs with earnings of more than £10,000 a year. It was introduced for all businesses in 2012 in an attempt to stop the looming pensions crisis. The changes to age and lower earnings limits are expected to be phased in over the next eight years. They mean someone saving from 18 will build a pot 15 per cent higher than 22- year- olds. For a £ 12,000- a- year earner, it is the difference between a pension pot of £86,800 and £99,600. Jamie Jenkins of Standard Life said: “It’s right this is extended to include young workers. workers.” Chris Curr Curry of the Pensions Policy Instit Institute said “Many are still unde under-saving. It is one of our greatest great challenges.” But Fede Federation of Small Business c chairman Mike Cherry said d dropping the age “will burden small firms with yet m more costs”.