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Workplace Pension Scheme

To be an automatic enrolment scheme, there are three requirements that a pension scheme must meet:

  • Automatic Enrolment Criteria
  • Qualifying Criteria
  • Minimum Requirements

A Qualifying Pension Scheme can be used by an employer (as an alternative to NEST or equivalent – outlined below) to meet the new requirements if the scheme is a registered pension scheme that meets certain quality standards. It must be noted that these quality standards vary depending on the type of pension scheme involved, as follows:

To meet the Standard Quality Test, a total minimum contribution of 8% of qualifying earnings (£6,240 – £50,270 in 2023/24, including an employer contribution of at least 3%) will be needed in each relevant pay reference period.

NEST stands for the National Employment Savings Trust, which is a centralised, defined contribution occupational pension scheme which employers can choose to use to meet their duties under Auto-Enrolment. Any employer can choose to use NEST.

An employer’s existing scheme can certify that their scheme is a qualifying scheme if it passes any of the following Alternative Quality Tests based on the scheme’s usual pensionable pay definition:

Alternative quality tests

An employer’s existing scheme can certify that their scheme is a qualifying scheme if it passes any of the following alternative quality tests based on the scheme’s usual pensionable pay definition:

Pensionable Pay: Basic Pay

Minimum Employer Contribution: 4%

Minimum Total Contribution (Gross): 9%

 

Pensionable Pay: At least 85% of total pay

Minimum Employer Contribution: 3%

Minimum Total Contribution (Gross): 8%

Pensionable Pay: Total Pay

Minimum Employer Contribution: 3%

Minimum Total Contribution (Gross): 7%

The three requirements above are relatively complicated and it is essential that employers get this right.

Should you have any queries or would like further advice about meeting your Workplace Pension obligations, do not hesitate to contact Ashley Bellis or our other specialists to the right of this page.