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Pension auto-enrolment thresholds confirmed

As the start date for pension auto-enrolment approaches, the Government has confirmed that the earnings limits for contributions will rise in line with the thresholds for tax and national insurance.

Publishing its response to the consultation on the automatic enrolment earnings trigger and the qualifying earnings band, the Department for Work and Pensions revealed that minimum contributions will now be payable on earnings between £5,564 and £42,475.

When the auto-enrolment plans were originally announced, it was proposed that pension contributions would be payable on earnings between £5,035 and £33,500.

Earnings above this threshold will not be included in calculating an employee's pensionable pay for auto-enrolment contributions.

Under the revised guidance, eligible workers must be earning at least £8,105 a year to qualify for auto-enrolment. This is up from the original figure of £7,475.

Responding to the announcement, the Pensions Minister Steve Webb said: ‘The overwhelming response to our consultation was the call to align the automatic enrolment trigger with existing payroll thresholds.

‘This will help firms make a success of these reforms, as they will be able to better understand who is eligible to be enrolled.’

Auto-enrolment will commence in October 2012 and will be phased in on a staged basis, starting with larger employers.