Research and analysis

Review of the Automatic Enrolment Earnings Trigger and Qualifying Earnings Band for 2025/26: Supporting Analysis

Published 21 January 2025

Background 

Automatic enrolment obliges employers to enrol all workers into a qualifying workplace pension, provided that they ordinarily work in Great Britain and satisfy the age and earnings criteria. 

The automatic enrolment earnings trigger determines who is eligible to be automatically enrolled into a workplace pension by their employer based on how much they earn. There is also a qualifying earnings band in respect of which contributions are made – the band is defined by the lower earnings limit (LEL) and the upper earnings limit (UEL). The earnings trigger and the LEL and UEL are often jointly referred to as the automatic enrolment earnings thresholds. They are set in legislation and reviewed annually. This report sets out the methodology, analysis, and outcome of the review undertaken to set the thresholds for the 2025/2026 tax year. It is a statutory requirement that the Secretary of State reviews all 3 thresholds within each tax year. 

The LEL is relevant to defining who falls into the category of ‘non-eligible jobholders’. People in this group can opt-in to their employer’s workplace pension and will receive a mandatory employer contribution if they earn between the LEL and the earnings trigger.

Automatic enrolment applies to employers and eligible workers. By the end of December 2024, over 11.1 million workers had been automatically enrolled since 2012 and more than 2.4 million employers had met their duties since 2012^{[footnote 1]}.

Annual review 

The Pensions Act 2008 requires that the Secretary of State reviews the automatic enrolment earnings trigger and LEL and UEL within each tax year. Section 14 of the Act sets out certain factors which the Secretary of State may take into account in reviewing these amounts. The government can also set out policy objectives and the principles to inform the setting of the thresholds for 2025/2026. This does not pre-determine the approach for decisions on threshold levels in future years. The process allows the Secretary of State the flexibility to take into account prevailing economic factors when reaching a decision. 

The first 2 annual reviews established 3 guiding principles to be used when reviewing the automatic enrolment thresholds.  

a. Will the right people be brought into pension saving? In particular, at what level will the earnings trigger bring in as many people as possible who will benefit from saving? At what level does the trigger need to be set to avoid the automatic enrolment of those who are unlikely to benefit from saving? And what are the equality implications of the different options? 

b. What is the appropriate minimum level of saving for people who are automatically enrolled? Everyone who is automatically enrolled should pay contributions on a meaningful portion of their income. To ensure this, we need to maintain an appropriate gap between the LEL and the earnings trigger. 

c. Are the costs and benefits to individuals and employers appropriately balanced? The cost implications of the thresholds remain relevant, and we need to factor in the continuing importance of simplicity of administering automatic enrolment. 

The Secretary of State has considered each of the above principles alongside an assessment of the relevance of the review factors set out in the Pensions Act 2008 in reaching a conclusion on the level at which to set each threshold for 2025/2026.

Results of the review for 2025/2026 

Earnings trigger 

The earnings trigger is one of the 3 key factors which ultimately govern who is enrolled into a workplace pension scheme through AE. If the trigger is too high, then low to moderate earners who can afford to save (and who have been the main target group of the policy), may miss out on the benefits of a workplace pension. Set it too low, however, and the impact will be that more low paid workers will be brought into saving, but it could make little economic sense for them to save into a pension. This would divert income away from their immediate day-to-day needs. 

The Secretary of State has considered the latest analytical evidence and the policy objectives. She has concluded that the existing threshold of £10,000 for the earnings trigger remains the correct level and will be maintained for 2025/2026. This represents a real terms decrease in the value of the trigger. Therefore, as earnings continue to grow, keeping the earnings trigger at £10,000 will see private sector pension participation at 15.7million in total. 

The decision reflects the key balance that needs to be struck between affordability for employers and individuals, and the policy objective of giving those who are most able to save the opportunity to accrue a meaningful level of retirement savings. It provides consistency of messaging for both employers and individuals. In the longer term, the government is committed to reviewing the pensions’ landscape and the long-term steps it can take to improve pension outcomes, including the level of savings people need to achieve the retirement they want. 

The Secretary of State has also assessed the equality impacts associated with this decision which are detailed later in this report. The Secretary of State is of the view that voluntary opt-in provides the most appropriate option for those earning less than the earnings trigger who wish to save. 

The Secretary of State has accounted for the impact of both the National Minimum Wage and the National Living Wage when considering what the earnings trigger should be and continues to monitor the impact of this on low earners and the automatic enrolment earnings trigger.

Qualifying earnings band - lower earnings limit (LEL) 

Automatic enrolment into a workplace pension with the payment of both employee and employer contributions is intended to build on the foundation of State Pension entitlement. The LEL of the qualifying earnings band determines the minimum level of an enrolled workers’ earnings on which they and their employer have to pay contributions. 

The Secretary of State has considered all review factors against the analysis and has decided to maintain the LEL at the 2024/2025 level. Therefore, the value of the lower limit of the qualifying earnings band for 2025/2026 will continue to be set at £6,240. 

The decision to maintain the automatic enrolment LEL at the existing level supports the principle of ensuring that everyone who is automatically enrolled would continue to pay contributions on a meaningful proportion of their income. It is consistent with the government’s ambitions to improve financial resilience for retirement, in particular among low and moderate earners. Maintaining the LEL helps ensure that pension savings in 2025/2026 will be broadly maintained – and slightly increased – compared to 2024/2025. 

For the future, the government is committed to looking at further steps to improve security in retirement.  

Qualifying earnings band – upper earnings limit (UEL) 

The upper limit of the qualifying earnings band (the UEL) caps mandatory employer contributions. It aims to distinguish the automatic enrolment target group of low to moderate earners and the statutory minimum contributions from earners in a higher tax band. These higher earners might reasonably be expected to have access to a pension scheme that offers more than the minimum and are more likely to make personal arrangements for additional saving. The Secretary of State has concluded that mandatory employer contributions should remain capped and that the value of the upper limit of the qualifying earnings band for 2025/2026 will continue to be set at £50,270. For the year 2025/2026, the National Insurance Contributions Upper Earnings Limit has also been maintained at the 2024/2025 level^{[footnote 2]}.

Proposed thresholds for 2025/2026 

The current (2024/2025) and proposed (2025/2026) automatic enrolment thresholds are displayed in Table 1. 

Table 1 – Current and proposed automatic enrolment thresholds (annual)

	Trigger	Lower limit qualifying earnings band	Upper limit qualifying earnings band
Current (2024/2025)	£10,000	£6,240	£50,270
Proposed (2025/2026)	£10,000	£6,240	£50,270

Methodology 

This section describes the methodology used to estimate the impact of proposed changes to the automatic enrolment thresholds. Impacts are calculated by comparing a modelled baseline scenario of thresholds in 2025/2026 to alternative threshold scenarios. These alternative scenarios are based on a range of options for how the 2025/2026 thresholds could be changed following a review under section 14 of the Pensions Act 2008. 

The baseline thresholds (where the thresholds are left unchanged) for 2025/2026 maintain the 2024/2025 thresholds. This effectively reduces the thresholds in real terms. 

Broadly, 3 different types of options are modelled for each threshold for comparison against the baseline. They are: 

1. Maintaining the thresholds at their 2024/2025 level.

2. Setting the thresholds in line with relevant 2025/2026 National Insurance or tax thresholds, for example the personal tax allowance (PTA) thresholds.

3. Uprating the 2024/2025 thresholds by a relevant index (for example, earnings, CPI etc.) 

In the model, total, individual and employer pension contributions in each scenario are estimated for the 2025/2026 tax year using:

• data from the 2023 Annual Survey of Hours and Earnings (ASHE) on private sector employees’ earnings and current levels of pension participation and contributions 

• estimates from 2023 ASHE data of the bands of earnings on which individuals are making pension contributions. Evidence showing that some employers and employees contribute on earnings below the LEL and/or above the UEL is accounted for

• OBR forecasts of average weekly earnings (AWE) growth of 5.15% between quarter 4 2023 and quarter 4 2024 

• OBR forecasts of consumer prices index (CPI) inflation of 2.43% between quarter 4 2023 and quarter 4 2024 

• changes to the estimated size of the employee workforce between 2023 and 2025 

• modelled impacts on eligible workers saving into a workplace pension (given known participation rates) using ASHE data as a result of making changes to the earnings trigger 

• contribution rates for employers and employees, where the minimum for a qualifying pension scheme in 2025/2026 is 8% total contributions (including tax relief) on relevant earnings, of which at least 3% is from the employer

These figures then inform estimates of: 

• income tax relief. Individuals receive tax relief on their pension contributions. It is estimated by multiplying total pensions contributions from individuals by the appropriate income tax rates

• employer tax relief. Because some employers have indicated that they have responded to increases in the cost of employer pension contributions by reducing wages and/or profits, it follows that they will have paid less employer National Insurance contributions and/or corporation tax due to these increased contributions than otherwise. Both of these effects are estimated by multiplying the overall size of employer pension contributions by: 

  • the percentage of employers who indicated that they behaved in that way in the Employers’ Pension Provision Survey 2019^{[footnote 3]} 

  • the appropriate tax rate, either employer NICs or corporation tax. 

Finally, estimates of the equalities impacts of different thresholds are produced using 2023 ASHE data and the Labour Force Survey (LFS). ASHE is used to analyse the proportion of additional/fewer participants and contributions for each option by gender and age. The LFS was used to analyse the impact of earnings threshold changes by disability status and ethnicity. The LFS is used for these characteristics as ASHE does not include this data. The LFS does not include data on pension contributions, so the equalities assessment by disability status and ethnicity is limited to an analysis of individuals brought newly above or below the earnings trigger by changes to this threshold relative to earnings. This is a proxy measure of the impact on participation by these characteristics, which may be less accurate if the participation rates of disabled low earners or low earners from minority ethnic groups differ significantly from the participation rates of other low earners. 

The breakdowns of these demographics are presented in Annex A.

Sources of uncertainty 

There are a number of sources of uncertainty in the analysis. The main sources of uncertainty are: 

• the approximation of real-world changes by modelling techniques

• statistical sampling uncertainty arising from the use of survey data. This uncertainty is greater when sample sizes are smaller. This means for example, that the equalities impact assessments are more uncertain for changes to the thresholds which affect fewer individuals

• the validity of behavioural assumptions. This uncertainty may be greater this year if past data on the impact of automatic enrolment on individuals’ pensions savings behaviour is a poor indicator of their behaviour in response to the prevailing economic conditions. Behavioural assumptions in the modelling are reviewed against available data on a regular basis. To date, data has continued to indicate that historic pension saving behaviour remains a good indicator for current pension saving 

Results 

A – Trends in pension saving 

Since April 2019 the minimum total contribution rates for automatic enrolment into a workplace pension has been fixed at 8% (on the qualifying band of earnings). Increases in the estimate of annual contribution levels are driven by earnings growth. Table 2 compares estimated pension contributions from the 2024/2025 thresholds and under the baseline thresholds in 2025/2026 and shows a £4 billion increase in pension saving, largely resulting from earnings growth. 

The recommended thresholds for the 2024/2025 automatic enrolment threshold review were to maintain the trigger at £10,000 whilst also maintaining the LEL and UEL at £6,240 and £50,270 respectively. The 2025/2026 baseline thresholds also maintain the earnings trigger at £10,000, and the LEL and UEL at £6,240 and £50,270 respectively. 

Table 2 – Nominal increase in total pension contributions from private sector employers, individuals, and initial impacts on income tax relief. 2024/2025 and 2025/2026 (£ million, cash terms)

	Employer Contributions (£million)	Employee Contributions (£million)	Income Tax Relief (£million)	Total Contributions (£million)	(Employer Tax Relief (£million))
Thresholds - Level of Pension Saving in 2024/2025 (£10,000; £6,240; £50,270)	£49,600	£25,300	£10,900	£85,800	£4,700
Baseline Thresholds - Level of Pension Saving in 2025/2026 (£10,000; £6,240; £50,270)	£51,900	£26,200	£11,700	£89,800	£4,900
Difference	£2,300	£900	£800	£4,000	£200

Source: DWP Modelling 

Notes for table 2

1. To estimate the baseline level of pension saving in 2025/2026, the 2024/2025 thresholds are maintained, and employee earnings are increased by a combination of OBR forecasts and National Minimum Wage/National Living Wage increases. 

2. Amounts saved are rounded to the nearest £100million. Figures may not sum due to rounding. 

3. Total contributions are the sum of employer contributions, employee contributions, and income tax relief on the employee’s contribution.

B – Impact of Proposed Thresholds for 2025/2026 

The proposed thresholds for 2025/2026 are: 

i. retaining the 2024/2025 automatic enrolment earnings trigger (£10,000) 

ii. retaining the 2024/2025 LEL (£6,240)

iii. retaining the 2024/2025 UEL (£50,270)

This proposal is consistent with 2024/2025, when the earnings trigger, LEL and UEL were all maintained at their existing level. 

Table 3 compares the impact of the baseline to the proposed thresholds on employers, employees, and Exchequer. The approach taken in previous years has also been considered in Table 3. However, the impact of taking this approach would have moved the LEL further away from the proposals outlined in the 2017 Review of Automatic Enrolment. Furthermore, it would have reduced pension contributions of low earners compared to the proposed option. 

Keeping the LEL held at its 2024/2025 rates allows for more contributions from low earners, with more net additional contributions coming from women than men. A detailed description on protected groups including women can be found in Annex A – Equalities Impact on Affected Groups. 

The National Insurance Upper Earnings Limit for the year 2025/2026 has been held at the 2024/2025 level. This decision was announced in the Chancellor of the Exchequer’s Autumn Budget 2024. Therefore, retaining the 2024/2025 UEL is the same as aligning the UEL with the National Insurance Upper Earnings Limit. The decision to maintain the UEL at the 2024/2025 rates helps to control costs for all parties, including employers. 

Under the proposed thresholds, the overall level of pension contributions is estimated to be £89.8 billion in 2025/2026. The proposed thresholds lead to contributions at no additional cost to employers, employees, or the Exchequer compared to the baseline.

Table 3 – Estimated impacts of changes to the earnings trigger and upper and lower limits of the qualifying earnings band on contributions from private sector employers, employees, and tax-relief (in 2025/2026)

Earnings Trigger	LEL	UEL	Rationale	Participants (000s)	Employer contributions (£million)	Employee contributions (£million)	Income tax relief (£million)	Total contributions (£million)	(Employer tax relief (£million))
£10,000	£6,240	£50,270	Baseline	15,700	51,900	26,200	11,700	89,800	4,900
£10,000	£6,240	£50,270	Proposal	0	0	0	0	0	0
£10,243	£6,392	£51,491	Uprate by CPI	-12	8	-5	4	7	1
£10,515	£6,562	£52,860	Uprate by AWE	-28	13	-13	9	9	1
£12,570	£6,500	£50,270	Align to NICs	-131	-113	-83	-23	-218	-11
£12,570	£12,570	£50,270	Align trigger and LEL to PTA	-131	-1,233	-904	-277	-2,413	-116
£6,500	£6,500	£50,270	Align trigger and LEL to NICs LEL	160	-25	3	-1	-24	-2

Source: DWP Modelling 

Notes for table 3

1. Scenarios after the baseline present the change in costs when compared to the baseline. 

2. Number of participants are rounded to the nearest 100,000 and the nearest 1,000 for the difference from baseline. Amounts saved are rounded to the nearest £100million for the baseline and the nearest £million for differences to baseline, with amounts between +/- £0.5million replaced by dashes. Figures may not sum due to rounding. 

3. The baseline scenario is that all thresholds are maintained at the 2024/2025 thresholds. 

4. The OBR’s October 2024 forecast for CPI between 2023 Q4 and 2024 Q4 of 2.43% was used. 

5. The OBR’s October 2024 forecast for earnings growth between 2023 Q4 and 2024 Q4 of 5.15% was used. 

6. When estimating tax relief, this analysis takes account of the Treasury change to the payment of tax relief for individuals in Net Pay Relief pension schemes that was introduced from April 2024^{[footnote 4]}. All employees are therefore assumed to be Relief at Source (RAS) scheme members. 

7. Tax relief has increased while employee contributions have decreased for the uprate by CPI and uprate by AWE options. This is because of the different tax rates below £12,570, and above £50,270. 

8. Where changes to multiple thresholds are modelled simultaneously, it is possible for the amounts of employer and employee contributions to move in opposite directions relative to the baseline. This reflects that the thresholds impact different parts of the earnings distribution, across which there are different patterns in terms of relative employer and employee contribution rates.

C – Impact of changing the earnings trigger in 2025/2026 

Table 4 shows the impact on employers, individuals, and Exchequer associated with the various options for the value of the earnings trigger in 2025/2026. These are isolated effects – both the LEL and UEL remain unchanged compared to the baseline. 

Maintaining the trigger at £10,000 for 2025/2026 will see private sector participation at 15.7 million in total and total annual contributions at £89.8billion. 

Lowering the earnings trigger would increase pension participation among lower earners compared to the baseline. For example, aligning the earnings trigger with the NI Lower Earnings Limit would increase pension participants by 160,000 people, increasing total contributions by £78million. 

Conversely, raising the earnings trigger would decrease pension participation compared to the baseline. For example, aligning the earnings trigger with the Personal Income Tax Allowance (£12,570) would decrease the number of savers into a workplace pension by an estimated 131,000 people, reducing total pension saving by £122million. 

The main section of this publication lays out the reasons behind the Secretary of State’s decision to maintain the earnings trigger at £10,000 for 2025/2026. This aims to bring as many people into automatic enrolment as possible who will benefit from saving, whilst avoiding the automatic enrolment of those unlikely to benefit.

Table 4 – Estimates of the direct impact of changing the earnings trigger on contributions from private sector employers, employees, and tax relief (in 2025/26) 

Earnings Trigger	Rationale	Participants (000s)	Employer contributions (£million)	Employee contributions (£million)	Income tax relief (£million)	Total contributions (£million)	(Employer tax relief (£million))
£10,000	Baseline	15,700	51,900	26,200	11,700	89,800	4,900
£10,000	Proposal	0	0	0	0	0	0
£10,243	Uprate by CPI	-12	-2	-4	-1	-7	-
£10,515	Uprate by AWE	-28	-7	-8	-2	-17	-1
£12,570	Align to PTA	-131	-63	-47	-12	-122	-6
£6,500	Align to NICs LEL	160	26	41	10	78	2

Source: DWP Modelling 

Notes for table 4

1. Scenarios after the baseline present the change in costs when compared to the baseline. 

2. Number of participants are rounded to the nearest 100,000 and the nearest 1,000 for the difference from baseline. Amounts saved are rounded to the nearest £100million for the baseline and the nearest £million for differences to baseline, with amounts between +/- £0.5million replaced by dashes. Figures may not sum due to rounding. 

3. The baseline scenario is that all thresholds are maintained at the 2024/2025 thresholds. 

4. The OBR’s October 2024 forecast for CPI between 2023 Q4 and 2024 Q4 of 2.43% was used. 

5. The OBR’s October 2024 forecast for earnings growth between 2023 Q4 and 2024 Q4 of 5.15% was used. 

6. Total pension saving is the sum of employer contributions, individual contributions, and income tax relief. 

7. Employer tax relief represents the tax no longer paid by employers who respond to the additional pension contribution costs of the workplace pension reforms by reducing profits or wages paid to their employees. 

8. When estimating tax relief, this analysis takes account of the Treasury change to the payment of tax relief for individuals in Net Pay Relief pension schemes that was introduced from April 2024^{[footnote 5]}. All employees are therefore assumed to be Relief at Source (RAS) scheme members. 

9. £12,570 is the HMRC personal allowance rate^{[footnote 6]}.

D – Impact of changing the lower limit of the qualifying earnings band in 2025/2026 

Table 5 shows the impact on employers, employees and government associated with the baseline thresholds and various options considered for the value of the 2025/2026 qualifying earnings band lower limit. As before, these are the impacts of isolated LEL changes. Unlike the earnings trigger, changing the LEL does not directly impact the number of people participating in a workplace pension. 

Total pension saving increases as the LEL decreases (compared to the baseline), as pension contributions are paid on more of an individual’s income. Maintaining the LEL at the 2024/2025 rate of £6,240 keeps total contributions constant relative to the baseline at £89.8billion. 

Increasing the LEL would reduce total pension saving compared to the baseline. For example, uprating the LEL by CPI would reduce total pension saving by £58million compared to the baseline scenario disproportionately impacting on low earning savers. 

Table 5 - Estimates of the direct impact of changing the lower limit of the qualifying earnings band on contributions from private sector employers, employees, and tax relief (in 2025/2026)

LEL	Rationale	Participants (000s)	Employer contributions (£million)	Employee contributions (£million)	Income tax relief (£million)	Total contributions (£million)	(Employer tax relief (£million))
£6,240	Baseline	15,700	51,900	26,200	11,700	89,800	4,900
£6,240	Proposal	0	0	0	0	0	0
£6,392	Uprate by CPI	0	-29	-22	-7	-58	-3
£6,562	Uprate by AWE	0	-62	-46	-14	-122	-6
£6,500	Align to NICs LEL	0	-50	-37	-11	-98	-5

Source: DWP Modelling 

Notes for table 5

1. Scenarios after the baseline present the change in costs when compared to the baseline. 

2. Number of participants are rounded to the nearest 100,000 and the nearest 1,000 for the difference from baseline. Amounts saved are rounded to the nearest £100million for the baseline and the nearest £million for differences to baseline, with amounts between +/- £0.5million replaced by dashes. Figures may not sum due to rounding. 

3. The baseline scenario is that all thresholds are maintained at the 2024/2025 thresholds. 

4. The OBR’s October 2024 forecast for CPI between 2023 Q4 and 2024 Q4 of 2.43% was used. 

5. The OBR’s October 2024 forecast for earnings growth between 2023 Q4 and 2024 Q4 of 5.15% was used. 

6. Total pension saving is the sum of employer contributions, individual contributions, and income tax relief. 

7. Employer tax relief represents the tax no longer paid by employers who respond to the additional pension contribution costs of the workplace pension reforms by reducing profits or wages paid to their employees. 

8. When estimating tax relief, this analysis takes account of the Treasury change to the payment of tax relief for individuals in Net Pay Relief pension schemes that was introduced from April 2024^{[footnote 7]}. All employees are therefore assumed to be Relief at Source (RAS) scheme members.

E - Impact of changing the upper limit of the qualifying earnings band in 2025/2026 

Table 6 shows the impact on employers, employees and government associated with the baseline upper earnings limit and various options considered for its value in 2025/2026, where these changes are made in isolation. 

Increasing the UEL increases total pension saving compared to the baseline, specifically by those in high income employments, because it increases the amount of income on which employers and employees pay contributions. For employees who earn less than the UEL, which was £50,270 in 2024/2025, maintaining or increasing the UEL has no effect on their total pension savings. Like the LEL, changing the UEL does not affect pension participation. 

Uprating the UEL with CPI would increase total contributions by £72million compared to the baseline, which maintains the 2024/2025 UEL. Maintaining the UEL at the 2024/2025 rate of £50,270 keeps total contributions constant relative to the baseline at £89.8billion. Therefore, this does not incur any additional costs to employers, employees, or the Exchequer relative to the baseline. 

Table 6 – Estimates of the direct impact of changing the upper limit of the qualifying earnings band on contributions from private sector employers, employees, and tax relief (in 2025/2026) 

UEL	Rationale	Participants (000s)	Employer contributions (£million)	Employee contributions (£million)	Income tax relief (£million)	Total contributions (£million)	(Employer tax relief (£million))
£50,270	Baseline	15,700	51,900	26,200	11,700	89,800	4,900
£50,270	Proposal	0	0	0	0	0	0
£51,491	Uprate by CPI	0	40	20	12	72	4
£52,860	Uprate by AWE	0	82	41	25	147	8

Source: DWP Modelling

Notes for table 6

1. Scenarios after the baseline present the change in costs when compared to the baseline. 

2. Number of participants are rounded to the nearest 100,000 and the nearest 1,000 for the difference from baseline. Amounts saved are rounded to the nearest £100million for the baseline and the nearest £million for differences to baseline, with amounts between +/- £0.5million replaced by dashes. Figures may not sum due to rounding. 

3. The baseline scenario is that all thresholds are maintained at the 2024/2025 thresholds. 

4. The OBR’s October 2024 forecast for CPI between 2023 Q4 and 2024 Q4 of 2.43% was used. 

5. The OBR’s October 2024 forecast for earnings growth between 2023 Q4 and 2024 Q4 of 5.15% was used. 

6. Total pension saving is the sum of employer contributions, individual contributions, and income tax relief. 

7. Employer tax relief represents the tax no longer paid by employers who respond to the additional pension contribution costs of the workplace pension reforms by reducing profits or wages paid to their employees. 

8. When estimating tax relief, this analysis takes account of the Treasury change to the payment of tax relief for individuals in Net Pay Relief pension schemes that was introduced from April 2024^{[footnote 8]}. All employees are therefore assumed to be Relief at Source (RAS) scheme members.

Annex A – equalities impacts on affected groups 

Introduction 

This section describes the estimated impact of the changes to the automatic enrolment earnings thresholds on the demographics of private sector pension savers. 

The demographic breakdowns for the following characteristics are presented:

a. women

b. age

c. those from Black, Asian and minority ethnic (BAME) backgrounds

d. those with a disability

There is no available data to assess the impact of changes by other protected characteristics, for example marital status or religion. 

Table 7 shows the estimated impact by gender and age on the pension participants from changes to the earnings trigger relative to baseline. The qualifying earnings bands do not impact participation and are therefore not included in this table. Table 8 shows the estimated impacts by gender and age on total contributions for all threshold changes listed in the Results section. 

In table 7, the demographic impacts of every scenario after baseline are shown using the proportion of additional/fewer participants under that scenario belonging to each demographic group. Under the baseline, approximately 43% of participants are female. As a result of maintaining the trigger at £10,000, pension participation remains unchanged compared to the baseline, as does the proportion of female participants. Similarly, table 8 shows what proportion of increased/decreased contributions under each scenario come from each demographic group. 

Table 9 shows the estimated impact by ethnicity and disability. As these characteristics are not present in the data used in the main modelling, estimates of the characteristics of those whose eligibility for automatic enrolment changes due to changes in the earnings trigger are used as a proxy for the impact on participation. Impacts by contributions are not available. As the qualifying earnings bands do not affect eligibility, they are not included. 

Women 

Table 7 shows approximately 43% of participants under the baseline scenario are women. Women are under-represented in this group because they are less likely to work in the private sector, and because they are more likely to work part-time where pension participation is lower^{[footnote 9]}. 

Maintaining the trigger or reducing it further from the baseline would bring more women into workplace pension participation. Women are more likely to fall into lower earning employment compared to men^{[footnote 10]}. Therefore, bringing in more participants who earn below £10,000 per annum will have a greater effect on women than men. For example, approximately 69% of new participants in pension saving as a result of reducing the earnings trigger to the NICs LEL are women. Under the proposal to maintain the trigger, the estimate on the proportion of female pension savers is unchanged compared to the baseline.

As shown in table 8, it is estimated that approximately 36% of total contributions in the baseline come from women. By maintaining all thresholds, this does not change the proportion of female pension savers compared to the baseline. 

Table 8 shows various impacts of changing the thresholds, including the impacts of uprating all thresholds by CPI or average earnings growth which both increase all thresholds. 

The option to uprate all thresholds by CPI leads to an increase in total contributions of £7million relative to the baseline, by increasing male contributions by £20million while reducing female contributions by £12million. Therefore, the fall in women’s contributions is 172% of the overall increase in contributions. This is principally the result of more male employees earning above the UEL than female employees. This means that increases in pension contributions from male employees from raising the UEL in line with CPI is greater than the losses from raising the earnings trigger and LEL. This is not true for female employees. A similar explanation can also be applied to the option to increase all thresholds with average weekly earnings. 

Age 

Approximately half of participants under the baseline scenario are people between the age of 30 and 49. This age group contributed more than half of the total contributions under the baseline threshold. 

Under the proposal to maintain the trigger at £10,000, we estimate that the group of participants aged under 30 will remain the same at 19% compared to the baseline. Under the same proposal we estimate that the group of participants aged 50 or over will remain at 30% compared to the baseline. It is estimated that scenarios increasing the trigger compared to the baseline would have proportionately fewer new participants aged under 30, and proportionately more new participants aged 50 and over, compared to the population of existing savers.

In the baseline, of the £89.8billion in total contributions, 13% are from participants aged under 30, and 34% are from participants aged 50 or over. By maintaining the 2024/2025 thresholds, the proportion of contributions that come those aged under 30 or aged 50 or over does not change compared to the baseline. 

Ethnicity 

Table 9 shows that Black, Asian and minority ethnic people make up 16% of the eligible population under the baseline scenario and a higher proportion of those who would be made eligible by lowering the trigger. For example, it is estimated that if the trigger was lowered to the level of the NICs LEL, 22% of newly eligible individuals would be from these ethnic groups. Figures for the proposal to maintain the trigger are unchanged compared to the baseline. 

Disability 

Table 9 shows that people with a disability make up 19% of the eligible population under the baseline scenario and a higher proportion of those who would be made eligible by lowering the trigger. For example, it is estimated that if the trigger was lowered to the level of the NICs LEL, 34% of newly eligible individuals would have a disability. Figures for the proposal to maintain the trigger are unchanged compared to the baseline. 

Table 7 – Equalities impact of threshold changes on participants – age and gender

Scenario	Participants (000s)	Of which female	Of which aged <30	Of which aged 50+
Baseline	15,700	43%	19%	30%
Combined options:
Proposal	0	-	-	-
Uprate all thresholds by CPI	-12	72%	18%	31%
Uprate all thresholds by AWE	-28	70%	17%	37%
Align to NICs LEL and PTA	-131	76%	16%	39%
Align both trigger and LEL to PTA	-131	76%	16%	39%
Align both trigger and LEL to NICs LEL	160	69%	17%	39%
Trigger only options:
Uprate trigger by CPI	-12	72%	18%	31%
Uprate trigger by AWE	-28	70%	17%	37%
Align trigger to PTA	-131	76%	16%	39%
Align trigger to NICs LEL	160	69%	17%	39%

Source: DWP Modelling 

Notes for table 7

1. The number of participants under the baseline is rounded to the nearest 100,000, and the change in participants as a result of changes to the thresholds is rounded to the nearest 1,000. 

2. Percentages show what percentage of participants under baseline comes from each demographic group, and what percentage of additional/fewer participants under changes to the thresholds comes from each group, both rounded to the nearest percentage point. 

3. The baseline scenario is that all thresholds are maintained at the 2024/2025 thresholds. 

4. The OBR’s October 2024 forecast for CPI between 2023 Q4 and 2024 Q4 of 2.43% was used. 

5. The OBR’s October 2024 forecast for earnings growth between 2023 Q4 and 2024 Q4 of 5.15% was used. 

6. Figures relating to the NICs aligned thresholds scenario are not included in this table as both this scenario and the proposal to freeze all thresholds set the earnings trigger to £10,000. The difference in the thresholds for the LEL and UEL do not make a difference on number of additional savers from the baseline. Since it is the earnings trigger that impacts the number of participants, both the NICs aligned threshold scenario and the proposal to freeze all thresholds has the same effect on the additional number of participants.

Table 8 – Equalities impact of threshold changes on total contributions – age and gender 

Scenario	Total contributions (£million)	Of which female	Of which aged <30	Of which aged 50+
Baseline	89,800	36%	13%	34%
Combined options:
Proposal	0	-	-	-
Uprate all thresholds by CPI	7	-172%	-87%	74%
Uprate all thresholds by AWE	9	-312%	-159%	94%
Align to NICs LEL and PTA	-218	62%	17%	36%
Align both trigger and LEL to PTA	-2,413	45%	20%	31%
Align both trigger and LEL to NICs LEL	-24	-41%	27%	12%
Trigger only options:
Uprate trigger by CPI	-7	75%	18%	30%
Uprate trigger by AWE	-17	70%	20%	34%
Align trigger to PTA	-122	76%	15%	41%
Align trigger to NICs LEL	78	72%	17%	37%
LEL only options:
Uprate LEL by CPI	-58	45%	20%	31%
Uprate LEL by AWE	-122	45%	20%	31%
Align LEL to NICs LEL	-98	45%	20%	31%
UEL only options:
Uprate UEL by CPI	72	26%	9%	35%
Uprate UEL by AWE	147	26%	9%	35%

Source: DWP Modelling 

Notes for table 8

1. The amount of total contributions under the baseline is rounded to the nearest £100million, and the change in total contributions as a result of changes to the thresholds is rounded to the nearest £million. 

2. Percentages show what percentage of total contributions under baseline comes from each demographic group, and what percentage of additional/reduced contributions under changes to the thresholds comes from each group, both rounded to the nearest percentage point. 

3. The baseline scenario is that all thresholds are maintained at the 2024/2025 thresholds. 

4. The OBR’s October 2024 forecast for CPI between 2023 Q4 and 2024 Q4 of 2.43% was used. 

5. The OBR’s October 2024 forecast for earnings growth between 2023 Q4 and 2024 Q4 of 5.15% was used. 

6. Where a change in contributions attributed to a demographic group is shown as negative, this indicates that the change for that particular group was in the opposite direction to that of the overall change. 

7. Where a change in contributions attributed to a demographic group has an absolute value of over 100%, this indicates that the absolute value of the change for that particular group was larger than the size of the overall change.

Table 9 – Equalities impact of earnings trigger changes – ethnicity and disability 

Scenario	Participants (000s)	Of which BAME	Of which have a disability
Baseline	15,700	16%	19%
Changes
Proposal	0	-	-
Uprate by CPI	-12	..	..
Uprate by AWE	-28	..	..
Align to PTA	-131	21%*	32%
Align to NICs LEL	160	22%*	34%

Source: ASHE 2023, LFS 2023/24 and DWP Modelling 

Notes for table 9

1. Information on ethnicity and disability is not present in the ASHE data used to estimate changes to participation. The proxy measure used instead is the impact on eligible employees using LFS data. See the methodology section of this document. Percentages show the percentage of eligible employees under the baseline from each demographic group, and the percentage of additional/fewer eligible employees under changes to the baseline from each group, both rounded to the nearest percentage point. 

2. Figures are the average of 4 quarters to ensure a sufficient sample size and to account for seasonality in the data. 

3. The baseline saving scenario is that all thresholds are maintained at the 2024/2025 levels. 

4. The OBR’s October 2024 forecast for CPI between 2023 Q4 and 2024 Q4 of 2.43% was used. 

5. The OBR’s October 2024 forecast for earnings growth between 2023 Q4 and 2024 Q4 of 5.15% was used. 

6. The number of participants under the baseline is rounded to the nearest 100,000, and the change in participants as a result of changes to the thresholds is rounded to the nearest 1,000. 

7. Demographic breakdowns for uprating by CPI and AWE are not available due to very small sample sizes. Figures marked * carry a relatively high degree of uncertainty due to small sample sizes.

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1. The Pensions Regulator Automatic enrolment declaration of compliance report ↩

2. 30 October 2024 Autumn Budget ↩

3. Employers’ Pension Provision Survey 2019 ↩

4. Relief relating to net pay arrangements ↩

5. Relief relating to net pay arrangements ↩

6. Income Tax rates and Personal Allowances ↩

7. Relief relating to net pay arrangements ↩

8. Relief relating to net pay arrangements ↩

9. Workplace pension participation and savings trends of eligible employees: 2009 to 2023 ↩

10. Workplace pension participation and savings trends of eligible employees: 2009 to 2023 ↩