Author: JW / / Latest News
Pension auto enrolment for 18-21 year olds earning £10,000 or more per year will take place from 2020.
Since 2012 when auto enrollment came into practise, millions of people have been brought into a pension scheme who would previously not have.
David Gauke, Work and Pensions Secretary, made the announcement on 18/12/17. This will mean employers will have to pay 1% of the employee’s wages much like those over the age of 21 (under current legislation). The auto enrollment age change is set to benefit those under 22 by saving early. This is due to increasing life expectancy, so longer time in retirement.
It is predicted this will bring 900,000 young people into saving for a pension. Equalling an extra £800million into pension pots.
It will be calculated from the first pound earned, rather than an earning band. This will allow for more saving, and more simplicity to the system.
The aim is to instill a habit to save, to allow for a good pension to retire with. Those earning less than £10,000 can opt in. Alternatively those who do earn over £10,000 can opt out of the auto enrollment.