The auto-enrolment earnings trigger and the lower and upper limits for the qualifying earnings band have been confirmed by the Department for Work and Pensions (DWP).
In its response to a consultation on the auto-enrolment earnings trigger and qualifying earnings bands, published today, the DWP proposed a AE earnings trigger of £8,105.
The lower limit for qualifying earnings, at which workers can join pension schemes but are not auto-enrolled, should be £5,564, the DWP proposed.
An upper limit for qualifying earnings of £42,475 was proposed. Earnings after this threshold will not be included in calcluating an employee's pensionable pay for auto-enrolment contributions.
The proposed measures would bring the auto-enrolment lower earnings trigger in line with the personal income tax allowance, and the upper limit into line with the 40% income tax bracket.
However, Rudi Smith, senior consultant at Towers Watson, said there is still no clarity over whether the auto-enrolment thresholds will automatically change when the personal allowance increases and the 40% tax bracket decreases next year.
"Under the original legislation, all of the automatic enrolment thresholds would have increased with national average earnings each year," said Smith.
"The government changed the law so it could adjust these numbers however it sees fit.
"Today's announcement provides few clues as to what will happen to the top of the qualifying earnings band when the national insurance upper earnings Limit is reduced in April 2013."
Smith said the government has emphasised its desire for simplicity in the auto-enrolment rules, but said it had added the alignment of the auto-enrolment thresholds with the tax brackets "does not set a pattern for the future".
The DWP said: "The government recognises the advantages of alignment with the tax and national insurance contributions thresholds.
"However, a lock-in to any particular approach may not be suitable or sustainable in the event of any future developments in the structure of tax and national insurance, changes in expected savings patterns or in economic circumstances, so it is important that flexibility to review the thresholds and triggers for future years is retained."
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