Pension Auto-enrolment: Defining the workforce

Peninsula Team

November 18 2012

The requirement to auto-enrol workers into a pension scheme will affect every employer with at least one worker over the next few years. However, not every worker will be affected so employers need to know just who out of their workforce needs to be automatically enrolled and who does not. Additionally, of those who do not need to be enrolled, who can opt in if they choose?

Read this article for guidance on the enrolment status of each of your workers.

Categories of worker
There are different categories of worker depending on their age and how much they earn. The different categories have all been given a specific name: ‘eligible jobholders’; ‘non-eligible jobholders’; and ‘entitled workers’.

Eligible jobholders
• Aged between 22 and state pension age;
• Have qualifying earnings above £8,105

Non-eligible jobholders:
• Aged between 16 and 74;
• Have qualifying earnings between £5,564 and £8,105
OR
• Aged between 16 and 21, or state pension age and 74;
• Have qualifying earnings above £8,105

Entitled workers
• Ages between 16 and 74
• Do not have qualifying earnings above £5,564

In addition, workers must work or ordinarily work in the UK under their contract to fit into any of the categories above.

Employer duties
Employers must register with the Pensions Regulator within 4 months of their staging date.

Eligible jobholders must be automatically enrolled into a qualifying pension scheme. The eligible jobholder must also be provided with information telling him that he has been, or will be, automatically enrolled and what this means for them, and their right to opt out and opt back in again. The employer will also have to provide information about the eligible jobholder to the scheme.

Non-eligible jobholders do not need to be automatically enrolled. However, they have the right to opt in to an automatic enrolment scheme should they choose to. Employers must provide non-eligible jobholders with information on opting in and this must be given within one month of the employer’s staging date provided the non-eligible jobholder has not already had this information. If the non-eligible jobholder joins the employer’s organisation after their staging date, the information must be provided within one month of commencement of employment.

Entitled workers do not need to be automatically enrolled but they do have a right to join a pension scheme, although the pension scheme does not need to be the same one used for auto enrolment. Employers must provide entitled workers with information about joining a pension scheme and what this means for them within one month of the employer’s staging date provided the entitled worker has not already had this information. If the entitled worker joins the employer’s organisation after their staging date, the information must be provided within one month of commencement of employment.

Contributions for each category
Employers must make contributions to the pension scheme for eligible jobholders and non-eligible jobholders. Employers are not required to contribute to the pension scheme for entitled workers but they may do so if they choose, or if the pension scheme requires employer contribution. However, employers must deduct contributions on behalf of the entitled worker.

Monitoring
Because the categories are based on age and earnings, it is necessary that employers monitor employees’ age and earnings in case this means a move from one category to another.

For any further clarification, please call our 24 Hour Advice Service on 0844 892 2772.

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