Employer Duties Glossary

Automatic enrolment - Simplified solution by Helm Godfrey

Agreement

An undertaking by an employer or a worker to pay the required minimum contributions for Automatic Enrolment.

Assessment

Determining the status of a Worker (i.e. whether they are an Eligible Jobholder, Non-eligible Jobholder or Entitled Worker or whether no Employer Duties apply) by assessing their age, employment status and earnings.

Assessment Date

The date on which the Assessment of a worker must be carried out (e.g. on the employer’s Staging Date, the date an individual starts employment or a worker’s 22nd birthday, etc.).

Automatic Enrolment

An employer entering an Eligible Jobholder into an Automatic Enrolment Pension Scheme without the need for any action on the part of the jobholder.

Automatic Enrolment Criteria

The ability of a scheme to make enrolment automatic (i.e. the rules must permit the employer to enrol Jobholders automatically with no requirement for any action, choice or information from the Jobholder).

Automatic Enrolment Date

The date an Eligible Jobholder must be automatically enrolled. This will be the first day that the criteria to be an Eligible Jobholder are met or, if postponed, the Deferral Date (if still an Eligible Jobholder on that date).

Automatic Enrolment Pension Scheme

A scheme which meets the Automatic Enrolment Criteria, the Qualifying Criteria and the Minimum Requirements.

Basic Pay

Gross earnings, excluding commission, bonuses, overtime, shift, car or location allowances, etc.

Ceasing Membership

Where a member chooses to leave a scheme outside of the opt-out period or where a member leaves a scheme to which they were subject to contractual enrolment. No refund of contributions is possible unless the scheme rules allow.

Certification

The self-certification by an employer that a scheme meets the minimum set 1, 2 or 3 contributions and pensionable pay requirements.

Certified Scheme

A pension scheme which the employer has certified as meeting the Certification requirements.

Compliance Notice

A notice issued by the Pensions Regulator directing an employer to comply with its duties with regard to its workers.

Contractual Enrolment

A contractual agreement under which a worker joins a pension scheme (not under the Employer Duties for Automatic Enrolment).

Declaration of Compliance

An online declaration which must be made by the Employer, within 5 months of its Staging Date, to confirm to the Pensions Regulator that it is complying with the auto-enrolment legislation.

Deferral Date

The last day of the Postponement Period. This is likely to be the date on which the employer must assess the Worker and, if they are an Eligible Jobholder, enrol them into an Automatic Enrolment Pension Scheme.

Detailed Guidance

Guidance in 9 parts published by the Pensions Regulator.

Earnings Trigger for Automatic Enrolment

The level of Qualifying Earnings at which the requirement for Automatic Enrolment is triggered. For the year commencing 6 April 2016, this is £10,000 p.a. (or the pro-rata monthly, weekly, etc. equivalent).

Enrolment Date

The date on which a Jobholder who opts-in to a scheme must be enrolled. This is the first day of the next Pay Reference Period after the employer receives the valid opt-in notice or, if the payroll has already closed, the first day of the second Pay Reference Period.

Eligible Jobholder

An individual who is eligible for auto-enrolment because they:

  1. are aged 22 to State Pension Age (SPA)
  2. work or ordinarily work in the UK, and
  3. have pay above the Earnings Trigger for Automatic Enrolment.

Employer Duties

Ten duties that employers have under the Pensions Act 2008, including the duty to enrol certain workers into a Qualifying Pension Scheme.

Enrolment Information

Prescribed information that must be given during the Joining Window to a Jobholder who is to be enrolled or re-enrolled into a Qualifying Pension Scheme.

Entitled Worker

An individual who is entitled to join a pension scheme because they:

  1. are aged 16 to 75,
  2. work or ordinarily work in the UK, and
  3. do not have Qualifying Earnings (i.e. their pay is below the Lower Earnings Threshold).

Inducements

Any action taken by an employer with the sole or main purpose of inducing a Jobholder to opt-out or cease membership of an auto-enrolment scheme.

Jobholder

A worker who:

  1. is aged 16 to 75
  2. works, or ordinarily works, in the UK, and
  3. has Qualifying Earnings in the relevant Pay Reference Period (i.e. above the Lower Earnings Threshold).

Joining Notice

An election to join from an Entitled Worker which:

  1. is in writing, and
  2. is signed by the Entitled Worker or, if by email, includes a statement that it was personally submitted by the worker.

Joining Window

A six-week period from an Eligible Jobholder’s Automatic Enrolment Date during which the employer must:

  1. give information to the scheme about the Jobholder
  2. give Enrolment Information to the Jobholder about their enrolment
  3. make arrangements to achieve membership from the Automatic Enrolment Date.

Lower Earnings Threshold

The lower threshold for Qualifying Earnings which is £5,824 per annum for the 2016/17 tax year.

Minimum Requirements

DC – The scheme rules (or, if a GPP, agreements between the employer, employee and provider) must provide for payment of contributions of at least the minimum levels based on qualifying earnings (phased in). Alternatively, the employer may be able to provide Certification.
DB – The scheme must have been contracted-out or provide a minimum benefit level (broadly 1/120th of final earnings).

NEST

The National Employment Savings Trust.

Non-eligible Jobholder

An individual who is not eligible for Automatic Enrolment but who is entitled to join a Qualifying Pension Scheme (and have employer contributions paid for them) because they:

  1. are over age 22 but under State Pension Age (SPA),
  2. work or ordinarily work in the UK, and
  3. have Qualifying Earnings but are below the Earnings Trigger for Automatic Enrolment

    or:
  4. are aged 16 to 21, or SPA to 74,
  5. work or ordinarily work in the UK, and
  6. have Qualifying Earnings.

Opt-in Notice

An election to join a Qualifying Pension Scheme from a Non-eligible Jobholder or Entitled Worker which:

  1. is in writing, and
  2. is signed by the individual or, if sent by email, includes a statement that it was personally submitted by the individual.

Opt-out Notice

An election to leave or not join an Automatic Enrolment Scheme received from an Eligible Jobholder within the Opt-out Period.

Opt-out Period

The period of one month from the later of:

  1. the Automatic Enrolment Date,
  2. the Jobholder becoming an active member (i.e. the date the administrative steps are taken to achieve active membership), and
  3. the date the Jobholder is given written Enrolment Information.

Opting in

A Non-eligible Jobholder or Entitled Worker choosing to join a Qualifying Pension Scheme and giving a valid Opt-in Notice to their employer.

Opting out

An Eligible Jobholder electing to leave a scheme and giving a valid Opt-out Notice to their employer within the Opt-out Period. The jobholder is then treated as having never joined and any contributions paid are refunded.

Pay Reference Period

Period of work for which a worker is periodically paid (e.g. calendar month, tax month, week from Monday to Sunday, week from Thursday to Wednesday, etc.).

Phasing

For DC schemes, the gradual introduction & increase in the minimum level of contributions.

Postponement

The postponement, for up to 3 months, of the Automatic Enrolment or Assessment of a Worker.

Postponement Notice

A notice telling a Worker that:

  • Automatic Enrolment has been postponed,
  • the Deferral Date.
  • that on the Deferral Date, they will be Automatically Enrolled into an Automatic Enrolment Pension Scheme if they meet the criteria to be an Eligible Jobholder, and
  • that they can opt-in before the Deferral Data if they wish.

Prohibited Recruitment Conduct

The prohibition on employers from asking questions or making any statements during recruitment that states or implies that a job applicant’s success could depend on whether or not they opt out of an auto-enrolment scheme.

Qualifying Criteria

A scheme must be a registered UK occupational pension scheme or personal pension scheme, or a non-UK pension scheme which meets certain requirements.

Qualifying Earnings

Earnings between the Lower and Upper Earnings Thresholds, where earnings include:

  1. salary or wages,
  2. commission,
  3. bonuses,overtime, and
  4. statutory payments (SSP, SMP, paternity and adoption pay).

Qualifying Pension Scheme

A scheme which meets the Qualifying Criteria and the Minimum Requirements.

Registration

An employer’s duty to tell the Pensions Regulator about the pension scheme(s) it will use to fulfil its Employer Duties (now called the 'Declaration of Compliance').

Re-enrolment Date

The date on which a Jobholder who has opted-out must be automatically re-enrolled.

Safeguards

The protection of workers from Unfair Treatment, Inducement or Prohibited Recruitment Conduct in connection with the Employer Duties.

Staging Date

The date by which an employer must comply with the requirements for auto-enrolment and the other Employer Duties, set depending upon the number of employees on its largest PAYE scheme on 1 April 2012.

Set 1

Contributions of at least 9% of basic pay (at least 4% of which must be from the employer)

Set 2

Contributions of at least 8% of pensionable pay (at least 3% of which must be from the employer) provided that pensionable pay constitutes at least 85% of total earnings at scheme level

Set 3

Contributions of at least 7% of total pay (at least 3% of which must be from the employer)

Upper Earnings Threshold

The upper level for Qualifying Earnings which is £43,000 for 2016/17.

Unfair Treatment

The unfair treatment or dismissal of a worker on grounds related to the Employer Duties.

Worker

An individual who:

  1. works under a contract of employment (an employee), or
  2. has a contract to perform work or services personally (i.e. cannot sub-contract or send substitute) and is not undertaking work as part of their own business.

 

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