A Private Member’s Bill that will see the hugely successful pension auto-enrolment scheme widened to include all workers from the age of 18 and the minimum earning threshold for contributions scrapped, has cleared parliament and been granted Royal Assent.

The bill is backed by MP Jonathan Gullis and former pensions minister Baroness Ros Altmann and will lower the age limit from 22 to 18 and remove the minimum earning limit of £6,240 per annum so that the first pound of earnings will be used for pension contributions.

The changes, which will still need to go through a consultation to confirm the details and timings, will unlock the initiative to millions more workers, allowing them to benefit from employer contributions and tax relief on pension contributions. Industry experts, including Pensions Minister, Laura Trott, are praising the reform with Trott promising to consult on the proposals as early as possible.

Partner and Actuary at pensions and employee benefit specialist Quantum Advisory, Stuart Price, said: “Auto-enrolment is one of the most effective formats implemented within the pension industry in recent times seeing pension contributions rise from £41billion in 2012 to £62billion in 2021. Younger workers will likely see the most benefits; profiting from compound interest growth while also forming a solid foundation of saving for retirement as soon as they start their working lives.

“Some are now calling for the age limit to be lowered further to include 16-year-olds. I would say in the first instance, retirement saving for the self-employed needs to be addressed and the contributions paid in by both employees and employers needs to be increased. The latter might not be a vote-pleaser – particularly with a general election looming – but the current combined contribution of 8% of salary is not enough to realistically provide recipients with a comfortable retirement.

“For now, this bill is steering things in the right direction and opening up the beneficial scheme to more people.”

For more information about auto-enrolment visit: https://quantumadvisory.co.uk/