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The Pensions (Extension of Automatic Enrolment) Act 2023

The Pensions (Extension of Automatic Enrolment) Act 2023

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Volume 2023 | Issue 22

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A Private Member’s Bill supported by the DWP, has recently received Royal Assent. This gives the government the power to make some long-awaited changes to the automatic enrolment legislation.


Automatic enrolment has been a success in terms of increasing the number of people saving for retirement in pension schemes. However, there are concerns about the amount being saved through automatic enrolment. A 2017 review of automatic enrolment made several recommendations to improve the legislation, which the government agreed to implement “by the mid-2020s”. The first step towards this has come in the shape of primary legislation that allows for the government to legislate in a couple of key areas.

What does the new Act do?

The minimum age for jobholders

Automatic enrolment currently focuses on workers who are aged between 22 and State Pension age and who have earnings with an employer of more than £10,000.

The 2017 review recommended this minimum age was reduced to 18. The new Act gives the DWP the power to reduce the age by regulations (although it does not specify a particular age to reduce it to).

An equivalent power is included for jobholders who are to be automatically re-enrolled into a pension scheme after opting out.

The basis for calculating contributions

Pension contributions for automatic enrolment are calculated on “qualifying earnings” and assessed on a band of earnings that is reviewed each year (and is currently between £6,420 and £50,270).

The 2017 review recommended that contributions be calculated from the first pound earned rather than the lower limit of the band of earnings. The new Act gives the DWP the power to either reduce the lower limit of the qualifying earnings band or repeal it altogether (along with the existing provisions for workers without qualifying earnings).

Why can’t the existing law just be amended?

The provisions in question are contained in the Pensions Act 2008. Provisions in Acts cannot be amended by regulations – they need to be changed by other primary legislation (Acts of Parliament). The detail will then be included in regulations. Before actually making these amendments, the new Act requires the DWP to consult on specific proposals.

When are these changes likely to take effect?

No timescale has been confirmed, but it is expected that the DWP will consult on draft regulations in the near future.


The wording in the Act is deliberately wide, but the expectation is that the minimum age for automatic enrolment will be reduced to 18 and the lower earnings limit of the qualifying earnings band will be dropped altogether, rather than just reduced. However, the consultation may consider phasing the changes in over a number of years, particularly in light of the current economic climate.

These measures are a step towards implementing the changes recommended by the 2017 review aimed at helping to boost the amounts saved in pensions through automatic enrolment.