Many workers don’t take up the pension plan their employers offered them. Because they risked losing valuable benefits, the government introduced ‘automatic enrolment’ to make it an employer’s duty to enrol all their eligible staff into a pension. This might be an employer sponsored arrangement, or another plan like the National Employment Savings Trust (NEST).
You must enrol any eligible employees (who aren’t already in a qualifying plan) into your employer pension scheme without any active decision on their part.
Employers must enrol anyone who’s eligible into their pension plan.
If you already have a pension plan (or plans) for your workers, you’ll need to decide:
To be qualifying, all plans must meet 'qualifying criteria'. If you're planning to use an existing Prudential plan for either automatic enrolment or qualification purposes you'll need to check with us that this would be acceptable.
Ahead of their staging date, an employer with an existing pension plan will have to identify which category of worker the active plan members fall into.
Things to think about for existing plans
If the employer has eligible jobholders who are already active members of their existing pension scheme, employers will need to consider whether they want to use the existing pension scheme as a qualifying scheme for these existing members. This will mean that they won't have an automatic enrolment duty for these employees, but will have to send them information. Employers need to ensure new joiners are automatically enrolled into a suitable plan - this may be the employer's current or alternative plan.
When you initially needed to automatically enrol jobholders depended on how many workers you employ, and was based on PAYE tax information. The date by which you need to have introduced automatic enrolment in your workplace pension arrangement is known as your 'staging date'.
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There's a wide range of workers who'll need to be considered. The table below shows the rights of different groups of eligible jobholders. We've also provided some key points, and some questions and answers.
|From 16 to 21||From 22 to SPA*||From SPA* to 74|
|£520 and below||Has a right to join a pension scheme|
|Over £520 up to £833||Has a right to opt in||Has a right to opt in||Has a right to opt in|
|Over £833||Has a right to opt in||Automatically enrol||Has a right to opt in|
We can’t control what’s shown on any other websites.Figures correct as of 2023/2024. *SPA=State Pension Age. Use this calculator to check the State Pension Age.
Figures above have been rounded up, and exact figures should be applied. Note the lower earnings limit for 2023/2024 is £6,240.
Who needs to be enrolled?
1. Jobholders aged between 22 and the State Pension Age, earning more than £833 gross per month (£10,000 per year) must be automatically enrolled into a suitable workplace pension and the employer must contribute to it.
2. Jobholders earning more than £833 gross per month (£10,000 per year), aged between 16 and 21 or aged between State Pension Age and 74, can opt-in to the pension plan.
3. Jobholders aged between 16 - 74 with gross earnings between £520 gross per month (£6,240 per year) and £833 gross per month (£10,000 per year) have the choice to opt-in to the plan.
4. Jobholders aged between 16 - 74 with gross earnings of £520 per month (£6,240 per year) or less, have the right to join a pension plan.
5. Employers must issue a jobholder agreement to all scheme members.
6. Every three years, employers must re-enrol eligible jobholders who previously opted-out.
Earnings threshold for the tax year (2023/2024)
|2022/2023||Annual||1 week||2 weeks||4 weeks||1 month||1 quarter||6 monthly|
The figures above are for the 2023/2024 tax year. The Government may change these in future years.
*The above figures are approximated. Exact figures should be confirmed with The Pensions Regulator.
A jobholder, or worker, includes individuals who:
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From April 2019, there is a minimum contribution of 8% of qualifying earnings that needs to be paid into a qualifying pension plan for all eligible jobholders. Of which the employer must pay a minimum of 3%. If the employer chooses to pay the minimum 3%, the jobholder will pay the difference, topped up by tax relief from the Government.
Contribution levels, based on qualifying earnings, have been 'phased' in between October 2012 and April 2019. The rates from 6 April 2019 onwards:
|Time||Employer minimum contribution||Total minimum contribution|
|6 April 2019 onwards||3%||8%|
Employers can pay more than the minimum outlined here and there is flexibility to pay contributions differently.
Find out more about Self Certification.
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With a Prudential plan, you can pay contributions either as a fixed or variable amount.
If you make the payment on a variable basis, this would need to be done using a regular inter-bank transfer. Any variable payment would need to be accompanied by a detailed statement to show the contributions to be allocated to each employee's account. Without this statement we can't allocate any of the contributions received.
If payment is a fixed amount, this could be collected through a direct debit against a company bank account. If payment is made by fixed amount the pensionable pay basis would need to be basic pay (Alternative tier 1) as this doesn't vary each pay period.
A detailed statement showing the contributions to be allocated to each employees account would be required whenever there is any change to the amount paid. You'll need to tell us in the event of the change in pay, or contribution rates, or if any employees start or leave the plan. Without an updated statement, we would allocate contributions in accordance with the last statement received by Prudential. This may result in contributions being incorrectly allocated, which would require corrections.
Please note, it is the employer's responsibility to ensure that the amount paid/collected accurately reflects the amount required based on the employees earnings, and is at least equal to the minimum contributions required for each member in each pay period.
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Every employer with at least one employee has a duty to automatically enrol their employees into a workplace pension scheme, and to pay contributions at least equal to minimum levels set by the Government in respect of these employees.
If you would like your plan to qualify under the rules, we may be able to help you, but you will need to let us know six months before your staging date.
There's a lot to do, our checklist could help you.
Bite-sized explanations of terms used.
The Government has created an employer responsibility to automatically enrol eligible jobholders into a good pension plan, and to make contributions to it.
To make sure we offer customers value for money, like all who offer workplace contract-based plans, we answer to an independent group called the PCPTL.
The rules are now in place and there are a number of issues you will need to consider to practically implement the regulations.
On the 6th April 2015, the Government introduced additional requirements for workplace pensions.
If you are an Employer and want to discuss how we can work together or to find out more details about our corporate solutions, please contact us.