An auto-enrolment scheme is one where the employer must:
Contributions to a banded earnings pension scheme are based on a band of earnings (between £5668 and £41,450, using the figures for the 2013/2014 tax year). The lower and upper levels for this band will change from time to time. Banded earnings include overtime and bonuses, not just basic pay.
As an example, the contributions for someone earning £20,000 would be based on £14,332 (£20,000 minus £5668).
Contributions to a banded earnings scheme are based on a band of earnings (between £5668 and £41,450, using the figures for the 2013/2014 tax year). The bottom end of the band is called the contributions threshold (£5668 in the example above).
You can choose to have a deferred period of up to three months for your auto-enrolment scheme. This would let you defer auto-enrolling staff between the date they first became eligible for auto-enrolment and the end of the deferred period.
An employee can be defined as an individual who works under a contract of employment. This contract of employment can be inferred, so just because there isn’t a formalised contract of employment doesn’t mean that that individual isn’t an employee.
These are employees who are:
These are employees who have a right to join their employer's pension scheme
The employer only has to make a contribution for entitled workers if it is part of their contract of employment.
A jobholder is a subset of “workers” and broadly the employer is liable to make a minimum level of contributions for these workers if they are members of a scheme. Jobholders are in two types – eligible jobholders who will need to be auto-enrolled into an auto-enrolment scheme, unless they are already members of a qualifying scheme, and non-eligible jobholders who have to be offered access to an auto-enrolment scheme, unless again they are already members of a qualifying scheme, but don’t have to be auto-enrolled.
The minimum amount a person needs to earn to be auto-enrolled. This will be set by the government and may be the same as the income tax personal threshold (£9440 in 2013/2014 tax year).
NEST, the National Employment Savings Trust, is a new occupational pension scheme that launched on 1 October 2012. It is open to any employer with UK employees but employers can choose another provider for their auto-enrolment scheme.
These are employees who are:
A scheme that doesn't meet the minimum contribution or benefit levels set by the government for qualifying schemes.
Any worker can opt-in to their employer’s chosen qualifying scheme, though the employer may restrict their ability to do so if they have left the scheme within the last 12 months. If the worker is a job-holder who has qualifying earnings (earnings above the lower earnings trigger for automatic enrolment) the employer is liable to pay contributions as well. Employers don’t have to make any contributions in respect of “entitled workers.”
Opting-out is the process by which a worker can leave the pension scheme and obtain a refund of any contributions they have made. Opting out replaces cancellation rights under auto-enrolment schemes and to get a refund the worker must opt-out within 30 days of them receiving notice of their right to opt-out which will generally be sent along with confirmation that they have been auto-enrolled or enrolled into a scheme.
Contributions to a pensionable earnings scheme are based on earnings from the first £1. So for someone with pensionable earnings of £20,000 contributions would be based on £20,000. There is no upper earnings limit. Employers can decide whether to include overtime and bonuses, subject to this being allowed in the scheme rules.
The Pensions Regulator is responsible for making sure employers comply with the auto-enrolment regulations.
A pension scheme that meets or exceeds the contribution or benefit levels set by the government.
Salary sacrifice is a way of making pension contributions that could allow both employers and employees to save money. This is how it works:
Your staging date is the latest date by which you have to have an auto-enrolment scheme in place for your employees.
Worker means an individual who has entered into or works under:
Worker can therefore include some people who are subject to Schedule D tax and who otherwise might be viewed as self-employed.
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