Millions of workers will be better off in retirement after changes to pension auto-enrolment rules were passed through parliament.

A Private Members’ bill to expand auto-enrolment has been given Royal Assent, after changes to the scheme were proposed in 2017 to ensure more people save towards retirement. It’s hoped that the passing of this bill will make it easier for those on lower incomes to save more towards retirement, as well as young people.

The Department for Work and Pensions (DWP) is now launching a consultation on implementing the new measures, but it’s not yet known what date they will come into effect.

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Pension advice can help you get the most out of your retirement income, helping you on your way to a secure financial future. If you have more than £75k in pension savings, take the first step by arranging a free, no-obligation initial consultation with an expert from Aviva Financial Advice. Any recommendations advisers make will be for products from Aviva and other carefully selected partners. There’s no obligation, but if they feel you’d benefit from paid financial advice, they’ll go over how that works and the charges involved. Capital at risk.

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If you’re employed, chances are, your employer will have automatically enrolled you into a company pension scheme, into which both they and you must usually contribute. Under current rules, if you earn less than the lower earnings threshold, at £520 a month (£6,240 a year), or £120 a week, your employer doesn’t have to contribute to your pension. But this threshold is being abolished, which could benefit workers, for example, who are choosing to supplement their pension income by working part-time.

Changes to the scheme will also see employees auto-enrolled from the age of 18, rather than the previous age of 22, so they start saving into their pension from a younger age.

If you’ve been auto-enrolled into your employer’s workplace pension scheme, the minimum contribution is currently 8% of ‘qualifying earnings’ (between £6,240 and £50,70, but the lower earnings limit is being scrapped). Of that 8%, your employer can’t contribute less than 3%, but they can pay as much of the 8% as they want. This minimum contribution will now be applied from the first pound of earnings, rather than only to those above a minimum earnings threshold. Read more in our article How does pension auto-enrolment work?

Laura Trott, Pensions Minister, said: “Automatic enrolment has been a phenomenal success, and we are determined to go further. It’s great news that the Private Members’ Bill has successfully passed through Parliament and received Royal Assent.

“This will mean younger workers and those in lower paid employment will be able to fully participate in automatic enrolment.

“For the first time, every eligible worker will benefit from an employer contribution from the first pound earned – which will make a huge difference to their eventual pension.”

You can choose to opt out of your workplace pension, but employer contributions are a valuable benefit, and this will leave you with less saved in your pension. Some employers will pay in more than the minimum contribution, and you may contribute more if you wish, too.

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “Auto-enrolment has shone a light on people’s retirement planning. Over 10m people have been brought into a workplace pension so far and the changes in this Bill will help more people to save more. However, more still needs to be done to boost contribution levels beyond their current 8% minimum. For instance, we would like to see focus on how to encourage employers to boost their contributions as an incentive for employees to further boost theirs.”

Where to get pension help

If you want to get some tips and guidance for free, and you’re aged at least 50, you can arrange a phone appointment via the government’s free service called Pension Wise. If you want personal recommendations or advice about your specific circumstances, check out our guides on How to find the right financial advisor for you or How to get advice on your pension.

If you’re considering getting professional financial advice, Aviva is offering Rest Less members a free initial consultation with an expert to chat about your financial situation and goals. There’s no obligation, but if they feel you’d benefit from paid financial advice, they’ll go over how that works and the charges involved.

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