Pensions


The entitlement to a workplace pension depends primarily on the terms and conditions of the employment contract, but there have also been important changes in pensions law, with the introduction of pensions auto-enrolment.



The phasing in of auto-enrolment, which began in 2012, is now almost complete. Under this new regime, all employers owe a legal duty to auto-enrol eligible job-holders who are not already participating in a workplace pension into a qualifying auto-enrolment scheme, such as the National Employment Savings Trust (NEST). The duty has been implemented in stages and is now reaching the final stage. All eligible job-holders must have been enrolled into an auto-enrolment scheme by 1 February 2018 at the latest. 



In summary, under the new law, every employer must automatically enrol workers into a workplace pension scheme if they are eligible job-holders. This means that they:


• are aged at least 22 but under state pension age;



• earn above £10,000 a year (2017-18); and



• work, or ordinarily work, in the UK under a contract of employment or other contract to provide services personally (i.e. the genuinely self-employed are excluded). 



Some existing pension schemes already meet the minimum qualifying requirements of an auto-enrolment scheme. 



Under auto-enrolment, the employer must make pension contributions to the pension scheme on behalf of eligible job-holders, who may also have to contribute. Those who do not want to belong to the scheme can opt out after they have been enrolled. But employers must continue to automatically re-enrol eligible job-holders who have opted out, every three years.


As well as “eligible job-holders”, there are “non-eligible job holders”. These are:


• employees or workers aged between 16 and 21 or between state pension age and 74 who earn over the £10,000 earnings threshold; and


• employees or workers aged between 16 and 74 who earn more than the lower level of qualifying earnings (£5,876: 2017-18) and up to £10,000 a year.


Non-eligible job-holders do not have to be automatically enrolled, but they can opt to join the scheme. The employer must make contributions on their behalf.


The minimum total contributions that both parties must make under automatic enrolment have been set by the government and will increase between now and April 2019.There is information about these minimum contribution rates on the website of the Pensions Advisory service, which also runs a helpline.


Workers aged between 16 and 74 earning less than the lower level of qualifying earnings (£5,876) are entitled to join a workplace pension scheme although it need not be the auto-enrolment scheme and the employer does not have to make a contribution.


Since 1 July 2012, it has been against the law for any employer to:


• ask workers during the recruitment process if they plan to opt out; or 



• treat workers detrimentally if they seek to enforce their pension rights. 



The TUC celebrated the introduction of auto-enrolment, while acknowledging that the scheme is far from perfect. Many part-time workers (mostly women) will not earn enough to be enrolled automatically and instead will have to ask to join. Where workers have more than one employer, earnings from the different jobs are not added together to reach the £10,000 threshold.


In addition, unions fear that excluding the self-employed and workers who contract through intermediary vehicles such as umbrella companies or personal service companies will provide another spur to the spread of bogus self-employment and other exploitative models of working (see Chapter 2).