Pensions auto enrollment

As you are no doubt aware, in a move to encourage more people to save in pension schemes, the government has placed greater responsibility on employers to provide access to pension provision.

An employer will have to work out when the auto enrollment rules will have to be applied. This implementation date is known as the ‘staging date’. However, a crucial point is that the staging is set by reference to the number of persons in an employer’s PAYE scheme on 1 April 2012. The number of employees on the payroll now is irrelevant.

Examples of staging dates:

Number of employees            Staging date

250 to 349                               1 February 2014

62 to 89                                   1 July 2014

50 to 53                                   1 April 2015

If you would like any help in determining your staging date please do get in touch.

Core preparation

One of the key areas of compliance is to decide what types of workers are engaged by the business and business may need to spend some time in analyzing their workforce.

A ‘worker’ is:

  • An employee or
  • A person who has a contract to provide work or services personally and is not undertaking the work as part of their own business.

The secondary category is defined in the same way as a ‘worker’ in employment law. Such people, although not employees, are entitled to core employment rights.

There are three categories of workers: eligible jobholders, non-eligible jobholders and entitled workers.

An ‘eligible jobholder’ is:

  • Aged between 22 years and the State Pension Age
  • Earning over the minimum earnings threshold (£8,105 2012/13 expected to increase in line with the single persons allowance which is set to rise to £9,440)
  • Working or ordinarily working in the UK.

Most workers will be eligible jobholders unless the employer already has a qualifying pension scheme. These are the workers for which automatic enrollment will be required.

Other workers (non-eligible jobholders) may have the right to ‘opt in’ which means they can be treated as eligible jobholders. ‘Entitled workers’ are entitled to join the scheme but there is no requirement on the employer to make employer contributions in respect of these workers.

Please contact us if you are unsure of how to assess the types of workers you have as we can help you with this difficult process.

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