Pensions Minister, Torsten Bell, has confirmed that all automatic enrolment (AE) thresholds will be maintained at their 2024/25 levels in 2025/26, as the government looks to balance adequacy and affordability considerations.

In a written statement, Bell confirmed that this year's annual statutory review of the thresholds within AE has now been completed, and that all AE thresholds will be maintained at their current levels.

This means that the AE earnings trigger will remain at £10,000, while the lower earnings limit of the qualifying earnings band will remain at £6,240, and the upper earnings limit of the qualifying earnings band will remain at £50,270.

The supporting analysis from the Department for Work and Pensions (DWP) showed that this represents a real terms decrease in the value of the trigger, estimating that, as earnings continue to grow, keeping the earnings trigger at £10,000 will see private sector pension participation at 15.7 million in total.

It also showed that maintaining the lower earnings limit would help to ensure that pension savings in 2025/26 will be broadly maintained, and slightly increased, compared to 2024/25.

Given this, it said that the decision to maintain the AE lower earnings limit at the existing level is consistent with the government’s ambitions to improve financial resilience for retirement, in particular among low and moderate earners.

In the review, the DWP highlighted the decision as reflection of the need to balance the affordability for employers and individuals, and the policy objective of giving those who are most able to save the opportunity to accrue a meaningful level of retirement savings.

Indeed, Bell explained that the main focus of this year’s annual statutory review of the AE earnings trigger and lower and upper earnings limits of the qualifying earnings band was to ensure the continued stability of AE for employers and individuals.

"It is important that AE works for individuals, supporting those for whom it makes economic sense to save towards their pensions whilst also ensuring affordability for employers and taxpayers," he added.

Despite the lack of change, Bell also said that the government is "committed" to looking at long-term steps it can take to further improve pension outcomes.

However, Quilter financial planner, Ian Futcher, said that whilst "unsurprising", given the upcoming changes to National Insurance contributions and continued financial strain, the decision to maintain AE thresholds is a "missed opportunity" to drive higher contributions that could secure better retirement outcomes for millions of workers.

He continued: "The government's decision puts the onus on individuals to ensure they’re saving enough for their future.

"While AE has transformed pension saving, those relying solely on minimum contributions may find themselves falling short of the retirement they desire. Small increases now, even as little as 5 per cent, could be the difference between a retirement of necessity and one of choice and comfort."

Indeed, analysis from Quilter revealed the "transformative impact" that small increases in contributions can have over time, showing that increasing contributions by 5 per cent from age 35 boosts the retirement pot by £73,118, resulting in a total fund of £284,358 and an annual income of £31,405.

"Until reforms to raise minimum contributions are enacted, it’s essential that workers regularly review their pension contributions and take proactive steps to secure the retirement lifestyle they envision," he added.

Under the proposed thresholds, the overall level of pension contributions is estimated to be £89.8bn in 2025/2026.

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