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12th March 2018

Auto Enrolment Jargon That You Need To Know

Understanding your auto enrolment employee categories

The auto enrolment categories of workers are defined by their age and earnings.

These are workers that fit the category of automatically being enrolled into an auto enrolment pension scheme. They need to be:

1. Working in the UK

2. Earning more than £10,000 per year (the Earnings Trigger)

3. Aged between 22 and State Pension Age

Both the employer and the employee will pay into the pension scheme.

NON-ELIGIBLE WORKERS

These are workers that don’t automatically get enrolled into an auto enrolment pension scheme but they can voluntarily join. They will be working in the UK but may come into one of the following categories:

1. Aged between 16 and 21 or over the State Pension Age but younger than 74 but earning more than £10,000

2. Aged between 22 and State Pension Age but earns between £5824 and £9,999

Both the employer and the employee will pay into the pension scheme.

ENTITLED WORKERS

These are workers that can choose to join a pension scheme – not necessarily an auto enrolment scheme. They will be working in the UK but will fall into the following category:

1. Aged between 16 and 74 and earning less than £5,824 per year.

The employer does not need to pay into a pension scheme for these workers.

Take a look at some examples of monitoring age and earnings:

Reaching age 22 

Simon is aged 20. He earns more than the earnings trigger for automatic enrolment. His employer does not need to automatically enrol him because he is not yet 22 years old. However, Simon can choose to opt in to the scheme. His employer will need to give him information about both the right of a jobholder to opt in and the right of an entitled worker to join. The employer will also need to keep track of Simon’s age because, on his 22nd birthday, Simon will then need to be automatically enrolled as he will become an eligible jobholder (assuming he still has earnings above the earnings trigger for automatic enrolment).

Earning qualifying earnings 

Jasmine is 27 years old and works part time in her local shop. Her employer does not need to automatically enrol her because her earnings are below the lower level of qualifying earnings. However, Jasmine is an entitled worker so her employer will need to give her information about both the right of a jobholder to opt in and the right of an entitled worker to join. When her children start school, Jasmine starts working more hours, which pushes her earnings above the earnings trigger for automatic enrolment. Jasmine’s employer must now automatically enrol her, as she has become an eligible jobholder.

For further detailed guidance on auto enrolment, Contact Us Today.

Look out for our next blog which will cover further jargon that employers should understand.

Workplace Pension Auto Enrolment

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