Each year, the Department for Work and Pensions reviews the earnings thresholds for auto enrolment qualification and from 6 April 2019, the threshold to qualify for auto enrolment into a workplace pension will remain at the current level of £10,000. This has been set at the same level since 2014, despite the Personal Allowance rising - next year it is set to rise to £12,500.
This gap affects lower earners the most and has caused uproar in the pensions industry. This is because the point at which a person is enrolled into a pension scheme (the £10,000 threshold) and the point at which they start paying tax (the personal allowance) has widened, so this may have an impact on their ability to obtain tax relief on their pension contributions. This will also depend upon how their employer has set up their workplace pension scheme.
Those who have their pension on a ‘net pay’ method for contributions will be affected, which is estimated to be more than a million people. This isn’t a new issue unfortunately, but is merely worse now the gap between the two figures has widened.
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