Personal allowance rise impacts auto-enrolment

Autumn Statement 2012: The increase in the personal allowance announced by Chancellor George Osborne could result in fewer low earners being auto-enrolled into workplace pension schemes.

This is because the qualifying earnings thresholds for auto-enrolment are linked to pay-as-you-earn (PAYE) thresholds.

Zoe Lynch, a partner at pensions law firm Sackers, said: “For anyone who falls within the personal allowance, it’s good news on one level, because they don’t earn enough pay tax, but the downside is they don’t earn enough to be enrolled automatically in a pension scheme.

“It’s a bit of a double-edged sword in that increasing the personal allowance could take people out of pensions saving.”

She added that this could particularly impact women who might be more likely to work in part-time or lower-paid roles.