The qualifying earnings rules which govern auto-enrolment contributions should be scrapped to boost saving potential, according to provider NOW: Pensions.
It said average workers could miss out on about £90,000 of contributions over a working lifetime due to the rules. It wants contributions to be based on total salary instead of the current set up. At present workers who are auto-enrolled make phased contributions, up to a minimum of 8% by 2018, based on 'qualifying earnings'. For the 2014/15 tax year this is set by the Department for Work and Pensions between £5,772 and £41,865 a year. NOW: Pensions said this means that the first £5,772 of an employee's earnings is not included in the auto-enrolment calculation. For example, if ...
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