The Private Member's Bill to extend auto-enrolment (AE) has cleared Parliament and been granted Royal Assent.

The Bill creates powers to scrap the lower earnings limit and reduce the age for automatic enrolment.

It was introduced in the House of Commons by Jonathan Gullis MP and taken through the House of Lords by Baroness Altmann.

Mel Stride, Secretary of State for Work and Pensions, said: “This Bill will mean millions across the country can save more and save earlier – boosting security in older age and helping people achieve the retirements they’ve worked so hard for.”

Laura Trott, Minister for Pensions, said it means younger workers and those in lower-paid employment will be able to fully participate in automatic enrolment.

She said: “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.”

The Department for Work and Pensions (DWP) will launch a consultation on implementing the new measures introduced by The Pensions (Extension of Automatic Enrolment) (No 2) Act.

Kate Smith, head of pensions at Aegon, said: “The consultation should be carried out over two to three years starting no later than April 2025 on a phased basis so that employers and employees can get used to the increased contributions. Otherwise, someone earning £12,480 would see their contributions double overnight.”

AE extension will have the following benefits, according to Scottish Widows:

• Starting pension savings from the first pound earned will mean the youngest workers in lower-earning groups will boost their pension pot by 150%
• For a median private pension income of £13,400, this 150% boost will increase this income to £20,100 a year for a single individual
• This will also mean better retirement outcomes for disproportionately disadvantaged groups such as women, disabled people, and members of ethnic minority groups
• Removing the lower age limit, meanwhile, will see the average 18-year-old worker boosting their pension pot by £5,000 by the time they retire
• With the average 18-to-22-year-old earning £12,000 according to the ONS, someone who started saving at 18 will retire with £136,000 in their pension, compared to the £131,000 of someone who only started at 22
• This assumes a retirement age of 65 and a 2% real investment growth in pension savings.

Robert Cochran, pension expert at Scottish Widows, said: “It’s important for all workers to reap the benefits of paying into a workplace pension from early on in their careers and that no-one gets left behind, such as self-employed people, low earners and young people.

“It’s important too for providers to become a trusted voice for young people early on and speak to them via channels they use.”