As an employer, you need to have a clear understanding of your workforce because there will be a different Auto-Enrolment requirement depending on each type of worker.
Under the workplace pension reforms, a worker is anyone who works under a contract of employment or who works for or performs services personally for another party to the contract.
Therefore, for a new employer, workplace pension duties start from when they first employ a contractual employee.
Workers are assessed each pay run to see if they should be automatically enrolled and are known as an ‘Eligible Jobholder’. If not, they are either a ‘Non-Eligible Jobholder’ or an ‘Entitled Worker’.
An employee who must be auto-enrolled and is:
- aged between 22 and State Pension age (SPA) and
- earns above £10,000 a year / £833 a month / £192 a week (2023/24) – known as the earnings trigger and
- working or ordinarily working in the UK.
A person who doesn’t have to be auto-enrolled into a workplace pension.
They can ask to opt into an employer’s pension scheme, and their employer will have to pay into their pension pots on a regular basis. They are aged:
- aged between 16 and 21 or aged between State Pension age (SPA) and 74 and
- earns above £10,000 a year / £833 a month / £192 a week for the 2023/24 tax year – known as the earnings trigger
- are aged between 16 and 74 and
- have qualifying earnings between £6,240 a year (the lower earnings threshold) and £10,000 a year (earnings trigger for auto-enrolment) for the 2023/24 tax year.
An entitled worker does not need to be auto-enrolled.
They can ask to join an employer’s pension scheme, but an employer does not need to pay money into their pension pots unless they would like to.
An entitled worker is:
- aged between 16 and 74 and
- has earnings less than the lower earnings threshold (currently £6,240 a year / £520 a month / £120 a week for the 2023/24 tax year)
Employers have legal duties to provide their eligible employees with a pension scheme, keep them informed about their rights, and re-enrol staff who’ve opted out of your pension scheme every three years
As part of this, employers need to contribute to their workers’ pensions, monitor the age and earnings of their employees, and manage opt outs employees makes to the pension provider.
There are two key points where employers are legally required to send personalised information to each worker – before they join your scheme and at re-enrolment.
We can help with all that.
Should you have any queries or would like further advice about meeting your Auto-Enrolment obligations, do not hesitate to contact Ashley Bellis or our other Auto-Enrolment specialists to the right of this page.