Labour government considering whether to change auto-enrolment

The Labour government said in November 2024 that it would consider whether and when to change automatic enrolment, the workplace pension system that employers must use for eligible staff. The statement followed the 2024 general election and was made in answer to a written parliamentary question¹.

Under automatic enrolment, employees are eligible if they are not already in a workplace pension scheme, are between 22 years old and State Pension age, and earn more than the minimum earnings threshold, which has been £10,000 since 2015/16¹. In 2025/26, employers must make contributions on earnings between £6,240, the lower earnings limit, and £50,270, the upper earnings limit¹.

Minimum contributions were last increased to 8% of earnings in April 2019. Employers contribute a minimum 3% and employees 5%, including tax relief¹. The policy was phased in by employer size between October 2012 and February 2018¹. The House of Commons Library reports a tenfold increase in members contributing to defined contribution occupational pension schemes, from 0.9 million in 2011 to 10.6 million in 2019¹.

Two changes have been legislated for but not introduced. The Pensions (Extension of Automatic Enrolment) Act 2023 gave the Secretary of State the power to reduce the lower age limit for automatic enrolment and to remove the Lower Earnings Limit for qualifying earnings, so that contributions would be paid from the first pound earned¹. A 2017 review of the policy had proposed lowering the age threshold from 22 to 18 and removing the lower limit of the qualifying earnings band¹. During the passage of the 2023 Act, the Conservative government confirmed its intention to reduce the lower age limit to 18 years old¹. The government has not yet introduced the changes¹.

The November 2024 statement set out the current position:

The Library notes that automatic enrolment is widely agreed to have been a success, but that there are concerns many people are still under-saving for retirement¹.

Why it matters for households

The rules that decide who is enrolled and what is paid in are unchanged. Employees aged 22 or over and below State Pension age, earning more than £10,000, remain eligible, and the 8% minimum on qualifying earnings still applies, with the employer paying at least 3% and the employee 5% including tax relief¹. The minimum contribution rates therefore stay as they have been since April 2019¹.

The two changes under consideration would affect different groups. Lowering the age limit to 18 would bring younger workers into workplace pensions earlier, and removing the lower earnings limit would mean contributions calculated from the first pound earned rather than from £6,240, which would raise the amount deducted for many part-time and lower-paid workers and the amount their employers pay in¹. Both changes would also raise costs for employers, which is the trade-off the government's wording refers to¹. No date has been given for either change, and the government has not said whether it will proceed¹.

What happens next

The government has said it will consider if and when to make changes, but no timetable has been reported¹. The powers in the Pensions (Extension of Automatic Enrolment) Act 2023 remain unused, and the changes confirmed by the previous government have not been introduced¹.