Go back to insightsAnother Threshold Freeze to Watch
Much of the recent discussion around tax policy has focused on the government’s repeated freezes to tax thresholds. However, there is another long-running freeze quietly taking place, one that carries similar distortionary effects.
One area where governments can legitimately claim success is automatic enrolment (AE) into workplace pensions. Introduced by the Labour government and implemented by the subsequent Conservative administration, AE has transformed pension participation. The latest figures show more than 22 million people now contributing to workplace pensions — an increase of over 10 million since AE began in October 2012.
When AE was launched, most workers (excluding the self employed) were brought into the system once they earned at least £8,105 per year. Contributions from both employers and employees were then calculated on earnings between £5,564 and £42,475.
Given that average weekly earnings have risen by around 60% since 2012, you might reasonably expect these AE thresholds to have risen similarly to something like a £13,000 earnings trigger, with a contribution band ranging from roughly £8,900 to £68,000.
But that hasn’t happened. For both 2025/26 and 2026/27:
- The earnings trigger remains at £10,000, unchanged since 2014/15.
- The lower earnings band limit stays at £6,240, unchanged since 2020/21.
- The upper earnings band cap remains £50,270, unchanged since 2021/22.
Freezing the earnings trigger can be justified to some extent because it increases eligibility among parttime workers. However, many of these low earners will qualify for a state pension of £12,548 in 2026/27 (assuming a full 35year National Insurance record), potentially giving them a higher income in retirement than during working life.
The freeze on the earnings band itself is harder to defend. In 2012, the upper limit represented about 175% of average earnings; today it is closer to 130%. As a result, higher earners are seeing a shrinking proportion of their income covered by AE pension contributions. The government’s position is that these individuals are “more likely to make personal arrangements for additional saving.”
In other words, if you fall into this higher earner group, relying solely on AE may not be enough, additional pension planning is likely to be necessary.
The value of investments and any income from them can fall as well as rise, and you may not get back the amount originally invested.
Past performance is not a reliable indicator of future results.
20th February 2026