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Since the introduction of Auto Enrolment (AE) in 2012, millions of people have been enrolled into a workplace pension scheme.
Smaller firms, often referred to as micro employers, are now being impacted and face the task of auto enrolling any eligible staff they employ. The legislation applies to those who are employed and classed as ‘workers’ but this does not apply to all staff. Instead, there are different categories of workers determined by age and earnings.
It’s therefore important that employers are clear on the criteria used to determine whether someone is considered to be a worker and what category of worker they fall into, which we cover here in our latest article.
Crucially, if you have at least one worker, regardless of their age or earnings, you must declare your compliance with The Pensions Regulator (TPR). This should be done online and within five months of your staging date: www.tpr.gov.uk/dec-compliance.
TPR defines a worker as any individual who:
It is worth noting that a contract does not have to be in writing and can be a verbal arrangement.
Once you have determined your workers, you need to assess which category of worker they fall into as per the following table:
The earnings thresholds are detailed below and have been taken from TPR website.
All eligible jobholders must be automatically enrolled and payments made into a qualifying pension scheme, unless they decide to opt out.
Non eligible jobholders don’t have to be automatically enrolled into a workplace pension scheme, but if they choose to opt in payments must also be made by the employer.
For the final category, entitled workers are entitled to join a pension scheme but payments don’t need to be made by the employer.
There are certain scenarios where an employer would be excluded from AE duties. The following is a list of the only exceptions as stated by TPR on page 22 of this document: http://www.thepensionsregulator.gov.uk/docs/detailed-guidance-1.pdf and which we’ve highlighted below:
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