Question to the Department for Work and Pensions:

To ask the Secretary of State for Work and Pensions, with reference to employees who have reached the earnings trigger and are auto-enrolled onto a workplace pension scheme, what assessment she has made of the potential merits of setting the lower limit of qualifying earnings at £0 for the purposes of calculating how much employers should contribute towards an employee’s pension; and whether she has made an estimate of the cost of setting that limit at £0.

It remains the governments intention to lower the earnings limit on Automatic Enrolment as soon as Parliamentary time allows. The latest published estimate of the costs of this change to workplace pensions is set out in the analytical report that accompanied the 2017 Automatic Enrolment (AE) Review, here: Automatic enrolment review 2017: analytical report (publishing.service.gov.uk).

It shows that the removal of the AE Lower Earnings Limit (LEL) would initially increase total contributions by £2.6 billion per annum. This represents an initial upper bound cost estimate as, for example, many employers choose to pay above the current automatic enrolment statutory minimum contribution levels.

We continue to build the evidence base and use the latest data to improve the estimates in line with government’s ambition of implementing the AE 2017 Review proposals in the mid-2020s.