Parliament has passed legislation that will reduce the qualifying age for employees to be automatically enrolled in a pension scheme. As it stands, employees must be between the ages of 22 years and state pension age, but with the introduction of the new Pensions (Extension of Automatic Enrolment) Act 2023, the age at which eligible employees will be automatically enrolled will be lowered to 18.
This new legislation will also remove the lower earnings limit that is currently in force that requires an employee to earn at least £192 a week or £833 a month before being automatically enrolled into a scheme.
With more employees being eligible to be automatically enrolled into a pension, these developments will have a significant financial impact on employers. As yet, no date has been set for when the legislation comes into effect, and before it does, the Government will need to launch a consultation to seek views on how these changes are to be implemented. So, whilst there is no immediate change, employers should factor these developments into their long-term financial planning.
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