Workplace Pensions: The Absolute Basics Of Auto Enrolment

Does your payroll include the right deductions?

POSTED BY JAKE STUBBS ON 18/09/2017 @ 8:00AM

In 2012, changes to the rules around pensions made it compulsory for employers to give their employees the option of joining a workplace pension scheme. As from October this year, there are no more staging dates ...

You have to ensure your workplace pension contributions are correct at all times!

Staging dates were set for all employers who were 'live' as of 1 April 2012, and anyone who started up before the end of the September 2017. From 1st October 2017, auto-enrolment responsibilities will begin at the same time as PAYE responsibilities, meaning there will be no staging date.

Employees eligible for auto enrolment must be:

Between 22 and the state pension age
Earn over £10,000 per annum
Work in the UK

The minimum contribution level required for an auto-enrolment scheme is based on qualifying earnings. Qualifying earnings are income of more than £5,284 and £43,000 or less.

Qualifying earnings include:

salary
wages
overtime
bonuses
commissions
statutory sick pay
statutory maternity pay
statutory paternity pay
statutory adoption pay

As an alternative to qualifying earnings, you can choose to use certification. A certificate can cover all workers or groups of workers.

The minimum contribution levels are:

Sets 1 and 2 - use basic pay counting from the first pound of pay and all statutory payments delivered through payroll to calculate contributions.
Set 3 - uses total earnings counting from the first pound of pay and all statutory payments delivered through the payroll to calculate contributions. This is usually the same as qualifying earnings but with no lower band offset, because contributions are calculated from the first £ of pay.

Your employer duties will depend on the types of worker you employ, be that a jobholder, eligible jobholder, non-eligible job-holder and entitled worker:

Jobholder - a worker who is aged between 16 and 74 and is working or ordinarily works in the UK under their contract.
Eligible jobholder - a jobholder who is aged between 22 and state pension age and has qualifying earnings above the earnings trigger for automatic enrolment.
Non-eligible jobholder - a jobholder who is aged between 16 and 21 or state pension age and 74 and has qualifying earnings above the earnings trigger for automatic enrolment. Or a jobholder who is between 16 and 74 and has qualifying earnings equal to or below the earnings trigger for automatic enrolment.
Entitled worker - a worker who is aged between 16 and 74 and is working or ordinarily works in the UK under their contract, but they do not have qualifying earnings.

Failure to comply with your employer duties could result in the Pensions Regulator imposing penalties, which can be as high as £50,000 for an organisation where contributions due are not paid.

"Are you looking for a new
payroll provider?"

At Essendon Tax & Accounts, we have an expert payroll team and can ensure your payslips include the right statutory deductions, including workplace pensions. If you'd like to find out more about how we can help you, call us on or click here to ping us an email and let's see how we can help you.

Until next time ...

JAKE STUBBS