In a surprise move today, the Government has backed a Private Members’ Bill which will extend auto-enrolment (AE) pensions to millions more younger people and low earners.

If approved by Parliament, which now seems likely with government backing, the minimum age of AE enrolment will be lowered from 22 to 18.

In addition the Lower Earnings Limit for contributions will be abolished, enabling many more lower earners and part-time workers to take part.

The Department for Work and Pensions (DWP) said today it would support the Private Members' Bill to expand the number of people who can benefit from auto-enrolment (AE) which now covers nearly 11m people.

The Private Members Bill was brought to Parliament by Jonathan Gullis MP.

Former Pensions Minister and LCP consultant Steve Webb hailed the move as “a landmark day.”

He said: “This is truly a landmark day for UK pensions. With pensions policy having been stuck since the 2017 review there was a real risk that the gains from automatic enrolment would be stalled. 

“Now that the Government is backing the necessary legislation the way is cleared for younger workers to be brought in and for lower earners in particular to build up pensions more quickly.  The new Minister, Laura Trott, deserves huge credit for her role in unlocking this logjam”.

The government says that the intention is that the provisions in the Bill will not result in any immediate change but will give the Secretary of State powers to amend the age limit and lower qualifying earnings limit for Automatic Enrolment.

There will be a statutory requirement to consult and report on the implementation and timing of the changes before using these powers, the government says. This will help ensure that the strong consensus that underpins the success of automatic enrolment is maintained, the government says.

Pensions Minister Laura Trott said: “We know that these widely supported measures will make a meaningful difference to people’s pension saving over the years ahead.

“Doing this will see the government deliver on our commitment to help grow the economy and support the hard-working people of this country, particularly groups such as women, young people and lower earners who have historically found it harder to save for retirement.”

Mr Gullis said: “Auto-enrolment of pensions will benefit scores of young people in all four corners of the country, which is why I am delighted that Minister for Pensions Laura Trott is supportive of the Bill.

“With all the evidence of the huge positive impact it can have, it is a no-brainer that we now need to extend auto-enrolment to those aged 18 and above. I am confident this Bill will make a huge difference to people from Kidsgrove to Consett.

“Lowering the age at which eligible workers must be automatically enrolled into a pension scheme by their employers from 22 to 18 will make saving the norm for young adults and enable them to begin to save from the start of their working lives. In addition, the bill provides for the removal of the Lower Earnings Limit, supporting those with low earnings and multiple jobs by ensuring they are saving from the first pound earned.”

The government is keen to build on the success of AE which has seen the workplace pensions position transformed in the UK with more than 10.8m now automatically enrolled in workplace pensions. As a result, pension participation in the private sector for eligible employees has increased from 41% in 2012 to 86% in 2021.

The government intends to continue its work with employers and pension providers to further boost the amount of people in a workplace pension and the amount they save for retirement.

It says it will also continue its work on encouraging savers to know their pension options by introducing tools such as Pensions Dashboards and Mid-life MOTs.