| | Description | An explanation of some common terms used with pensions: |
| Resolution | Auto enrolment > This is where companies enrol eligible jobholders into a qualifying workplace pension. This is what both the employee and employer will pay into the employee’s pension pot. See the ‘Contributions’ section of this guide for more detail. A type of pension scheme related to the members’ earnings when they leave the scheme. Often called a final salary scheme. A type of pension scheme paid into by employees and employers. Usually, the contributions are then invested. The level of earnings from which a worker needs enrolling. These employees must be enrolled into your default qualifying pension scheme. You must make employer contributions towards it. Eligible job holders: - Are aged between 22 – state pension age (SPA)
- Earn above the automatic enrolment earnings trigger
- Are working in UK
 NOTE: If the employee turns 22 mid-tax month, you can wait until the next tax month to enrol them. This avoids partial contributions.
Employers can choose to postpone assessment for automatic enrolment. This is for any period of up to three months. Entitled workers: - Are aged between 16 and 74
- Earn less than the lower earnings limit (LEL) for NI
- Are working in UK
An entitled worker can join a pension scheme if they want to. It doesn’t have to be a qualifying scheme and you don’t have to make any employer contributions. These employees can choose to join a pension scheme. The scheme doesn’t have to be one you use for automatic enrolment. You don’t have to pay an employer pension contribution unless you want to. A type of pension scheme related to the members’ earnings when they leave the scheme. Also known as a Defined benefit (DB) scheme. A pension scheme that includes a combination of DB and DC benefits. An offer made by an employer encourage a member to transfer out of an existing pension scheme. Or to opt out of their automatic enrolment scheme. This is usually an upfront cash payment. It could be a one-off contribution to an alternative, usually DC, pension arrangement. The National Employment Savings Trust is a pension provider, available to all employers. They offer a pension scheme designed for automatic enrolment. Any UK employer can use it to meet their new workplace pension duties. Suitable for all sizes of organisation. Employees receive tax relief by taking the contribution on the gross amount of pay ( e.g. at 1%). A non-eligible jobholder is either: - Aged between 16 and 74
- Earns more than the lower earnings limit (LEL) for NI but not more than the automatic enrolment earnings trigger
- Working in UK
Or - Is aged between 16 and 21 or state pension age (SPA) and 74
- Earns more than the automatic enrolment earnings trigger
- Working in UK
A non-eligible jobholder can opt in to a pension scheme. It must be a qualifying scheme and you must make employer contributions. Read The Pension Provider website Employer contributions. A pension scheme set up by an employer for their workers. Some non-eligible jobholders have a right to opt in to a qualifying pension scheme. Entitled workers also have a right to join a pension scheme. Neither have to qualify for automatic enrolment. An employee, enroled due to automatic enrolment has the right to opt-out of the scheme. They must first receive the relevant information from their employer. If they don’t opt out within certain time scales, they can choose to leave the scheme. The pay reference period aligns with the tax periods. For a monthly paid employee, the pay reference period starts on the first day of the tax month. This is always the 6th day of a calendar month. Any employee pay that is subject to pension deductions. To check the payments subject to pension deductions, go to Settings. Select Payment & Deductions and select the relevant payment type. The lowest pension contribution increases planned by law. Known as Phasing. Employers can postpone their staging date under certain circumstances. Postponement allows employers to avoid pro-rated calculations. It also helps with refunding contributions. For example, when people opt out in a different tax year to the one in which the deduction happened. Qualifying earnings is a reference to earnings between a lower and upper level. Qualifying earnings consist of any of the following components of pay paid to the worker. - Salary
- Wages
- Commission
- Bonuses
- Overtime
- Statutory sick pay
- Statutory maternity pay
- Ordinary or additional statutory paternity pay
- Statutory adoption pay
It’s the employers' responsibility to understand TPR guidelines for qualifying earnings. You need to determine what the qualifying earnings are for your employees. We can’t tell you what earnings to use. If you’re unsure, contact TPR or your pension provider. This pension means the employee pays less, e.g. 0.8%. The government gives the remaining amount into the pension pot, e.g. 0.2% A salary sacrifice pension scheme deducts pension contributions from the employee's gross pay. This happens before the calculation of PAYE and National Insurance. This is the date from which employers must assess employees for automatic enrolment. See Eligible postponement. This is the pension scheme set up for your retirement that’s arranged by the employer. Both the employee and employer can contribute. [BCB:299:UKI - Personal content block - Dane:ECB] [BCB:304:UKI - Search override - Payroll UK:ECB] [BCB:276:UKI - hide back button:ECB] |
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