Let us explain what some common auto-enrollment terms mean...Staging date:
Your staging date is the latest date by which you have to have an auto-enrolment scheme in place for your employees.Postponement:
You can choose to postpone auto-enrolment for up to three months for some or all of your staff. You must write to your staff to tell them you’re postponing automatic enrolment for them. You can only postpone automatic enrolment from your staging date, an employee’s first day of employment, and/or the date an employee first becomes eligible for automatic enrolment. If you postpone from your staging date, it doesn’t change your staging date.Jobholder:
An employee who is aged between 16 and 74, ordinarily works in the UK and has Qualifying Earnings arising from employment. Jobholders are split into two categories – eligible jobholders and non-eligible jobholders.Eligible jobholder:
An employee who is aged between 22 and State Pension Age, ordinarily works in the UK and has Qualifying Earnings in excess of the Earnings Trigger. Eligible jobholders must be auto-enrolled.Non-eligible jobholder:
An employee who meets one of two sets of criteria. Either:
Aged between 16 and 74, ordinarily work in the UK and have Qualifying Earnings in excess of the lower threshold for Qualifying Earnings but less than the Earnings Trigger for auto-enrolment, or
Aged between 16 and 21 or between State Pension Age and 74, ordinarily work in the UK and have Qualifying Earnings in excess of the Earnings Trigger
Non-eligible jobholders are not automatically included in the auto-enrolment process, but they are entitled to join their employer’s qualifying scheme should they choose to do so. Employers must advise non-eligible jobholders of their right to opt-in and, if they do, the employer must pay contributions in exactly the same way as for auto-enrolled employees.
Entitled worker: Aged between 16 and 74, ordinarily works in the UK and has earnings below the Qualifying Earnings lower threshold arising from employment. An entitled worker is not enrolled automatically but is entitled to join a pension scheme, which may or may not be the employer’s qualifying scheme. The employer has a statutory obligation to deduct contributions from the entitled worker and pay them into a pension scheme, but there is no requirement for the employer to pay contributions for entitled workers.
Qualifying pension scheme: Any scheme to be used for auto-enrolment must meet minimum criteria. The employer must pay enough contributions to meet the minimum qualifying levels set by the government, put in place all the administrative requirements to auto-enrol employees, and have a default fund in which the contributions are automatically invested unless the employee chooses another fund or funds.
Qualifying earnings: These include salary, wages, commission, bonuses, overtime, statutory sick pay, statutory maternity, paternity and adoption pay.
Banded earnings: Contributions to a banded earnings pension scheme are based on a band of qualifying earnings between £5,824 and £43,000, using the figures for the 2016/2017 tax year. The lower and upper thresholds for this band will change each tax year. As an example, the contributions for someone earning £15,000 would be based on a percentage of £9,176 (£15,000 minus £5824).
Minimum earnings threshold: The minimum amount a person needs to earn to be auto-enrolled. This will be set by the government and is reviewed each April. IT has remained at £10,00 for the last few years.
Assessment Date: The date on which an employer determines an employee’s status. There are a number of dates on which an employer will have to assess an employee to establish whether they must be automatically enrolled. These are:
the employer’s staging date, for an employee already in employment on that date
the first day of employment, for an employee who starts employment after the employer’s staging date
the date of the worker’s 22nd birthday, where this occurs after the employer’s staging date
the date of the worker’s 16th birthday, where this occurs after the employer’s staging date
the date they receive an opt-in or joining notice from an employee
the deferral date, if an employer has chosen to use the postponement provision for an employee