Minimum income cap for auto-enrolment should be 'abolished'

A recent Scottish Widows Retirement Report has suggested that those with multiple jobs are missing out on £90m of employer pension contributions because they do not meet the minimum wage threshold.

AS it currently stands, only those that are earning more than £10,000 per year in a single job are automatically enrolled, excluding nearly 2 million ‘multi-jobbers’ whose income is split.

However, financial services firm Quantum partner and actuary Stuart Price is calling for the £10,000 cap to be abolished, allowing all workers between 18 and state pension age to be included.

“When auto enrolment was reviewed at the end of 2017, one of the outcomes was for the net to be widened so that 18-year olds will be included from the mid 2020’s,” Price said.

“While this is a step in the right direction, I believe the government should have also removed the minimum wage requirement. As well as ensuring many more would be saving for their retirement provision - which would overcome this multiple job issue - it would also make the auto enrolment administration process easier for employers and pension providers. A simplified system could also mean a reduction in the charges passed on to members.”

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