The government has announced proposals to extend pensions auto enrolment to include younger workers and to amend the way in which contributions are calculated.

The review’s recommendations, which will now be progressed and legislated for where necessary, will see:

• automatic enrolment duties continuing to apply to all employers, regardless of sector and size
• young people, from 18 years old, benefiting from automatic enrolment, introducing 900,000 young people into saving an additional £800 million through a workplace pension
• workplace pension contributions calculated from the first pound earned, rather than from a lower earnings limit – this will bring an extra £2.6 billion into pension saving, improving incentives for people in multiple jobs to opt-in, and simplifying the way employers assess their workforces and calculate contributions
• the earnings trigger remaining at £10,000 for 2018/19, subject to annual reviews
• contribution levels reviewed after the implementation of the 8% contribution rate in 2019
• the government testing a series of ‘targeted interventions’ – including through opportunities to work with organisations who act as ‘touch points’ for the 4.8 million self-employed people, such as banks and those who contract labour – to explore how technology can be used to increase their pension saving.’

The government plan to reduce the lower age limit to 18 by the mid 2020s, in order to encourage younger workers to get into ‘the habit of saving’.