Millions of part-time workers across the UK are poised for a significant boost to their retirement savings from April 2026, thanks to a key change linked to the rising National Living Wage.
Lower Hours Threshold for Pension Qualification
According to new analysis from pension provider Standard Life, the planned increase in the National Living Wage (NLW) to £12.71 per hour will dramatically lower the bar for qualifying for a workplace pension. From April 2026, an employee aged 22 or over earning the minimum wage could hit the £10,000 annual earnings trigger for auto-enrolment by working approximately 15 hours per week.
This marks a substantial reduction from the hours required when auto-enrolment was first introduced in 2012. Back then, with a lower minimum wage and earnings trigger, workers needed to put in around 25 hours per week across the year to qualify.
A Decade of Change in Pension Access
The analysis highlights how policy and wage growth have combined to improve pension access. While the auto-enrolment earnings threshold has been frozen at £10,000 since 2014, consistent rises in the minimum wage have steadily reduced the weekly working time needed to meet it.
Catherine Foot, Director of the Centre for the Future of Retirement at Standard Life, commented on the shift. "A rising minimum wage not only boosts pension savings through higher contributions on increased salaries, but it also makes auto-enrolment more accessible," she said.
Long-Term Impact and Future Considerations
Ms Foot emphasised that even modest pension savings can accumulate into a meaningful sum over time, especially when employer contributions are factored in. However, she acknowledged the immediate financial pressures facing low-income households and noted a balancing act ahead for policymakers.
"The Pensions Commission will need to carefully balance efforts to address under-saving among lower earners with the growing cost pressures facing employers as wages and employment costs continue to rise," she cautioned.
For full-time workers on the same minimum wage salary, the changes facilitated by the Labour Party government's policy could mean an additional £2,030 saved into their pension each year. This move represents a significant step towards improving financial security in retirement for a broader section of the UK workforce.
