Under the Pensions Act 2008, every employer in the UK must put certain staff into a pension scheme and contribute towards it. This is called 'automatic enrolment'.
Automatic Enrolment legislation states that every employer must automatically enrol workers into a compliant workplace pension scheme if they:
This means that the workforce must be assessed in each pay reference period, once the company has reached their Automatic Enrolment staging date, as per the table below:
|Under lower earnings threshold (£5,824)||Entitled worker|
|Between £5,824 and £10,000||Non-eligible jobholder|
|Over earnings trigger for automatic enrolment £10,000||
**State Pension Age
The company must then take the following actions:
Can ask to opt in. Company not required to contribute.
Can ask to opt-in and Company must pay contributions.
Company must auto-enrol and then pay contributions.
In order for a scheme to be Automatic Enrolment compliant it must:
Contribution amounts must meet the minimum levels as set out in the table below, according to the salary definition being used in the scheme:
|AE Minimums||Set 1||Set 2||Set 3|
|Salary Definition||Qualifying Earnings (£5,824 to £43,000 in 2016/17 tax year)||Basic Salary||Pensionable Earnings*||Total Earnings|
|First Transitional Period Staging Date to 5 April 2018||Total 2% (Min. Employer 1%)||Total 3% (Min. Employer 2%)||Total 2% (Min. Employer 1%)||Total 2% (Min. Employer 1%)|
|Second Transitional Period 6 April 2018 to 5 April 2019||Total 5% (Min. Employer 2%)||Total 6% (Min. Employer 3%)||Total 5% (Min. Employer 2%)||Total 5% (Min. Employer 2%)|
|Steady State 6 April 2019 Onwards||Total 8% (Min. Employer 3%)||Total 9% (Min. Employer 4%)||Total 8% (Min. Employer 3%)||Total 7% (Min. Employer 3%)|
Pensionable Earnings under Set 2 must be equal to or greater than Basic Salary and at least 85% of total earnings across the scheme.
If the employer meets the total minimum contribution requirement, then there will be no requirement for the employee to contribute, however they can do so if they wish.
Once the scheme is in place the company will need to complete a declaration of compliance to confirm that they have met the requirements of the legislation. This can be completed online via the regulators website and is used to confirm that an employer has complied with their duties.
The Pensions Regulator also provides an online checklist.