Tuesday, 11 December 2012

How Does The Workplace Pension Work?

Which workers are you obliged to automatically enrol into a workplace pension scheme?


There are three categories of worker for the purpose of auto-enrolment.

·         Eligible Jobholders – eligible for auto-enrolment;

·         Non Eligible Jobholders – not eligible, but they can opt in. If they do, you must contribute to that pension;

·         Entitled Workers – entitled to join a pension scheme if they wish, but it does not need to be a qualifying pension scheme and you are not required to contribute.


Eligible jobholders are those who are at least 22 years old, but have not yet reached State Pension Ag and earn more than the minimum earnings threshold.  This is set at £8,105 per year for tax year 2012-2013.


Non-eligible jobholders are those who are either (a) aged at least 16 but under 22, or aged at least State Pension Age but under 75, and earning over £8,105 per year, or (b) aged at least 16 but under 75 and earning at least £5,564 (for tax year 2012-13), but less than £8,105 per year.


Entitled workers are those who are at least 16 but under 75, and earning less than £5,564 per year.


In all cases, the worker must ordinarily work in the UK under their contract.  In addition, the provisions cover workers, which is a wider category than employees.  It does not, however, include people who are paid a fee for their services, such as a self employed, independent contractors, and consultants.


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