Lowering the earnings threshold for pension auto-enrolment (AE) from £10,000 would likely encourage AE participation due to ‘passive pension behaviour’, according to a study by the Department for Work and Pensions (DWP).

The DWP surveyed people earning between £5,000 and £19,000 a year to explore their attitudes, behaviours, and experiences with workplace pensions.

Survey respondents generally had more negative or neutral opinions towards a higher earnings trigger than a lower one, and there was a reluctance among all pension savers to miss out on the opportunity to contribute to a pension.

The DWP’s research highlighted that low earners felt that matched employer/employee AE pension contributions were fairer and more appealing than higher employee contributions, especially amongst those not currently saving into a pension.

It found that flexibilities, such as to opt down or up contribution levels, within AE would also likely increase participation, but concerns around such a scheme being potentially burdensome and confusing were raised.

Saving into a workplace pension was found to be generally considered desirable and important among low earners.

Passive drivers of pension saving, such as a lack of awareness of opt-out rights, legacy enrolment and AE, were prevalent amongst survey respondents.

However, misconceptions from individuals that their entitlement to benefits may be impacted if they started saving into a pension led some who were eligible to opt out.

The DWP also assessed factors influencing those opting into a pension despite being below the earnings trigger, finding that social and material factors, including employers’ own approaches, workplace norms, and pension infrastructure, had a stronger influence on pension saving behaviour than individuals’ characteristics and attitudes.

Active pension saving was found to be more prevalent among those who prioritised saving in general or felt financially secure at a household level.

Meanwhile, factors influencing opt-out decisions for those earning above the trigger including a perceived need to prioritise short-term budgeting due to rising living costs and other life events.

This reasoning was also felt among younger people in temporary toles with variable hours, who felt more financially vulnerable, that pension saving was not yet relevant, or prioritised alternative investments.

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