On 27 February 2019, the Department for Work and Pensions (DWP) produced their ‘Review of the automatic enrolment earnings trigger and qualifying earnings bands for 2020/21’ supporting analysis. This contained proposals that:

  • The Earnings Trigger should be maintained at £10,000
  • The QEBs should remain linked with the National Insurance thresholds (Lower and Upper Earnings Limit)

Employers and workers should note the comment about the removal of the lower QEB, something that is the Government’s ‘ambition in the mid-2020s’.

The Legislation

There are actually two pieces of legislation to look out for:

  1. The Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2020 laid by the DWP in Great Britain under provisions in the Pensions Act 2008
  2. The Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order (Northern Ireland) 2020 laid by the Department for Communities in Northern Ireland under provisions in the Pensions (No. 2) Act (Northern Ireland) 2008

The complications of devolution mean that the Department for Work and Pensions owns the overall policy of reviewing and proposing amendments to the thresholds.  However, the Department for Communities implements the policy in Northern Ireland but has no power to set different thresholds.

Guy Opperman, Parliamentary Under-Secretary of State for Work and Pensions and Financial Inclusion made a Written Statement on 13 February 2020 that he would lay legislation as per the supporting analysis.  The Great British legislation was laid as a draft Statutory Instrument and sets the following annual figures (with the 19/20 rates detailed as well for comparison):

Annual Threshold 2019/20 2020/21
QEB Lower Limit £6,136 (LEL) £6,240 (LEL)
QEB Upper Limit £50,000 (UEL) £50,000 (UEL)
Earnings Trigger £10,000 £10,000

 

For common Pay Reference Periods, the above proposals translate as follows:

Auto-Enrolment Thresholds 2020/21
Weekly 2 Weekly 4 Weekly Monthly Quarterly 6 Monthly
£ £ £ £ £ £
QEB Lower Limit (LEL) 120 240 480 520 1,560 3,120
QEB Upper Limit (UEL) 962 1,924 3,847 4,167 12,500 25,000
Earnings Trigger 192 384 768 833 2,499 4,998

 

The Order is a ‘draft affirmative’ piece of legislation which means that it cannot pass into law without approval from both Houses of Parliament following debate.

At the time of writing, we are awaiting this legislation.

The process before publication is more time-consuming in Northern Ireland, as Section 75 of the 1998 Northern Ireland Act requires ‘screening’.  The Section 75 screening process looks at the legislation against a broad range of factors that could impact on equality of opportunity.  For example, it looks at whether the policy intention is discriminatory in terms of age, religious belief, disability, political opinion etc

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