Following its annual review, the Department for Work and Pensions (DWP) has confirmed that the auto-enrolment earnings trigger will remain at £10,000 for the 2025/26 tax year. Additionally, the qualifying earnings band will remain unchanged, with the lower threshold set at £6,240 and the upper threshold at £50,270.

Impact of the freeze

As wages naturally increase over time, more employees will surpass the £10,000 earnings trigger, leading to more individuals being enrolled in workplace pension schemes.

For employers, this means higher pension costs as more employees become eligible for automatic enrolment. Employers will need to contribute more towards pension schemes, adding to the financial burden at a time when many businesses are already dealing with rising National Insurance (NI) costs and National Minimum Wage (NMW) increases. Businesses must factor these additional expenses into their payroll planning.

Beyond financial implications, employers must also stay on top of their administrative responsibilities, ensuring they regularly reassess employee eligibility for auto-enrolment and comply with pension regulations.

Key takeaways

Employers should be proactive in preparing for increased pension costs and administrative duties, particularly as more employees meet the auto-enrolment criteria. While this policy supports employees in saving for retirement, businesses must plan to manage the financial impact effectively.

For more information

For more information on how the freeze on thresholds for auto-enrolment will impact your organisation or help with preparing for increased pension costs, please contact me.