Bill to extend AE in UK receives Royal Assent

A Private Member's Bill to extend auto-enrolment (AE) in the UK has cleared parliament and been granted Royal Assent, in a move that is expected to ensure that "millions across the country can save more and save earlier".

As reported by our sister publication Pensions Age, the bill, which is sponsored by MP Jonathan Gullis and Baroness Ros Altmann, seeks two extensions to AE, abolishing the lower earnings limit for contributions and reducing the age for being automatically enrolled.

Analysis from the government has suggested that the AE changes, combined with the Mansion House Reforms announced in July, could see the average earner’s pension increase by nearly 50 per cent if saving across their entire career, while a minimum wage earner could see their pension pot increase by over 85 per cent.

Secretary of State for Work and Pensions Mel Stride, commented: “This bill will mean millions across the country can save more and save earlier – boosting security in older age and helping people achieve the retirements they’ve worked so hard for.”

Adding to this, Pensions Minister, Laura Trott, emphasised that while AE has been a "phenomenal success", the government is "determined to go further".

"It’s great news that the Private Members’ Bill has successfully passed through parliament and received Royal Assent," she continued.

“This will mean younger workers and those in lower paid employment will be able to fully participate in AE. For the first time, every eligible worker will benefit from an employer contribution from the first pound earned – which will make a huge difference to their eventual pension.”

Gullis, who introduced the bill, added: “I am delighted that the Pensions (Extension of Automatic Enrolment) Bill has received Royal Assent.

"Auto-enrolment is a significant step forward and will dramatically improve financial resilience in retirement for young people, women and lower earners.

“Nearly 25 per cent of people in Stoke-on-Trent North, Kidsgrove and Talke are not yet auto-enrolled on a pension plan, and this piece of legislation will ensure part-time, women, apprentices and young people have financial stability in the long-term.”

Although there had been disappointment that the bill was unable to pass through parliament prior to the summer recess, its journey through the House of Lords had since continued at pace, having completed its third reading yesterday (18 September).

A consultation on the implementation of the new measures is still expected to follow, with Trott previously committing to consulting on these plans "as soon as humanly possible".

Key issues that are expected to be covered in the consultation include whether these changes should be phased in, as well as the correct age threshold, given some calls to cut the age threshold to 16, rather than 18.

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