Employer’s Duties
Employer duties relating to pension scheme auto enrolment
An employer is defined as anyone who has a contract with a ‘worker’. The employer has certain duties and safeguards they must adhere to in relation to enrolling the worker into a pension scheme.
As a minimum, an employer with 1 or more worker(s) will need to register with The Pensions Regulator. It is essential that employers understand the different categories of workers and the duties they will have in respect of each category – “eligible jobholders”, “non-eligible jobholders” and “entitled workers”.
Eligible Job Holders
They are called this because they are ‘eligible’ for automatic enrolment’.
These are workers who:
- are aged at least 22 and under state pension age
- are working, or ordinarily working, in the UK
- have qualifying earnings payable by the employer (in the relevant pay reference period) that are above the earnings trigger for automatic enrolment (currently £10,000).
Non-Eligible Job Holders
They are called this because they are not eligible for automatic enrolment but can choose to opt in to a pension scheme and benefit from an employer contribution.
These include workers who are either:
- aged at least 16 and under 75.
- working or ordinarily working in the UK.
- have qualifying earnings payable by the employer (in the relevant pay reference period) that are above the lower earnings level for qualifying earnings (currently £5,824) but below the earnings trigger for automatic enrolment (currently £10,000).
or
- aged at least 16 and under 22 or between state pension age and under 75.
- working or ordinarily working in the UK.
- have qualifying earnings payable by the employer (in the relevant pay reference period) that are above the earnings trigger for automatic enrolment (currently £10,000).
Entitled Workers
They are called this because they are ‘entitled’ to join a pension scheme; the employer does not have to make any contribution.
These are workers who:
- are aged at least 16 and under 75
- are working, or ordinarily working, in the UK
- have qualifying earnings payable by the employer (in the relevant pay reference period) that are below the lower earnings level for qualifying earnings currently (£5,824).
The 10 employer duties essentially focus on “eligible jobholders” however there are important issues that relate to all categories.
10 Key Employer Duties Auto Enrolment And The Duty Of The Employer
Every employer has to ensure that employees who qualify as ‘eligible jobholders’ are enrolled into a ‘qualifying’ pension scheme. Enrolment must take place so that no action is required by those jobholders to achieve pension scheme membership.
There can be a waiting period of up to three months before jobholders have to be automatically enrolled. Employers with a waiting period have to notify each jobholder when automatic enrolment will occur; this has to be done by the time their employment with the company begins. Importantly, the notice must also explain that the jobholder has the right to opt-in to the scheme before the automatic enrolment date.
Employers will have to contribute to their qualifying pension schemes. The level of contribution required will depend on the type of pension arrangement eligible jobholders are enrolled into, and the rules of that arrangement.
Each employer will have to inform the trustees or managers of any pension arrangement of any opt-outs from their scheme. Jobholders who have been automatically enrolled will have the right to opt-out of membership, by giving notice to their employer.
Employers will have to register with the Pensions Regulator details of how they have complied with their duties, broadly speaking, within two months of initially completing the automatic enrolment process. Thereafter employers will have to regularly re-register every three years.
Jobholders who are not members of a qualifying pension scheme will be entitled to opt-in to a qualifying scheme if they so wish. If they do so, employers will have to arrange for them to join the scheme and will have to pay employer contributions for them.
Workers who do not qualify as jobholders because of low earnings will be entitled to join a pension scheme by giving a joining notice. If they do so, employers will have to arrange for them to start or re-start active membership
At regular intervals, employers will have to automatically re-enrol any eligible jobholders who are not already members of their qualifying pension scheme.
Employers will have to support the whole process by providing information to jobholders and workers as required by regulations.
Employers will have to keep records of the whole automatic enrolment process for at least six years.