DWP pension changes that will impact millions of young workers delayed

Massive changes to the way millions of younger workers save for their retirement could be delayed by the government in a move that has been described as "deeply disappointing" by pensions experts.

Pensions Minister Paul Maynard revealed at the Pensions Age Spring Conference that a consultation on lowering the age limit on the workplace pension auto-enrolment scheme is set to be delayed until the later part of this decade. Auto-enrolment automatically signs you up for your employer's pension scheme unless you decide against it, if you're 22 or older and earn more than £10,000.

Plans are in place to lower this age threshold to 18, encouraging younger workers to begin saving for retirement earlier. Additionally, the lower earnings limit the minimum amount you must earn before you and your employer start making contributions is due to be scrapped. This threshold is currently £6,240, reports the Mirror.

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The government had previously indicated these changes would come into effect by the mid-2020s. But Mr Maynard announced that a consultation on these changes will now not occur until the "mid to later part of this decade". Citing a report from Pensions Age, Mr Maynard stated: "We do need to consult further on the detailed implementation of any measures that increase contributions.

"I know there's great eagerness that we get on with this, but we have to do it in the right way at the right time. We are committed to doing so during the mid to later part of this decade."

The Extension of Automatic Enrolment Bill was given the Royal stamp of approval last September. Kate Smith, Aegon's Head of Pensions, expressed her dissatisfaction, stating: "I'm deeply disappointed that the Pensions Minister has confirmed that 2017 reforms of auto-enrolment implementation consultation will be delayed to the mid or late 2020s.

"We have been expecting this consultation for over six months now, ever since the Pensions Act enabling these reforms, passed back in September 2023."

She further pointed out, "Once implemented, this will widen the scope of auto-enrolment by lowering the minimum age from 22 to 18 and removing the salary offset so pension contributions are made from the first pound, once the reforms are implemented. This is bad news for pension savers, particularly low earners, who are disproportionately women."

"As time marches on, and with an election looming, it could be over ten years on from the 2017 review before changes start to be implemented, with potentially millions of employees losing out on higher pension contributions and facing poorer retirement income outcomes."

A spokesperson for the Department for Work and Pensions (DWP) stated: "We remain committed to expansion in the mid-2020s - by abolishing the Lower Earnings Limit for contributions and reducing the age for being automatically enrolled to 18 years old - which will benefit women and low earners, once poorly served or excluded from workplace pensions.

"We intend to carry out a consultation on the detailed implementation of these measures at the right time and in the right way."