Pensions auto-enrolment


All employers must auto-enrol eligible job-holders who are not already participating in a workplace pension into a qualifying auto-enrolment pension scheme such as the National Employment Savings Trust (NEST). All eligible job-holders must have been enrolled by 1 February 2018 at the latest. 



Eligible job-holders are:



• aged at least 22 but under state pension age;





• earn above £10,000 a year (2019-20); and





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





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





The employer must make pension contributions into the scheme on behalf of eligible job-holders, who also contribute. Anyone who does not want to belong to the scheme can opt out once they have been enrolled, but every three years, employers must automatically re-enrol eligible job-holders who have opted out.



Workers are assessed for eligibility at each pay period. Monthly-paid workers will be deemed to meet the earnings threshold when their monthly earnings reach at least £833. The equivalent amount for weekly paid workers is £192. Workers can be automatically enrolled even if their pay is irregular and reaches the threshold for just a short period.



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 earning over the £10,000 earnings threshold; and




• aged between 16 and 74 earning over the lower level of qualifying earnings (£6,136) and up to £10,000 a year.




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




The minimum contributions both parties must make under automatic enrolment are set by the government and have been increasing gradually, in April 2018 and again in April 2019. There are details on the website of the Pensions Advisory Service, which also runs a helpline.




Workers aged between 16 and 74 who earn less than the lower level of qualifying earnings (£6,136) who normally work in the UK have the right to ask to join a workplace pension scheme, but it need not be the auto-enrolment scheme and the employer need not make a contribution. Workers in this category are termed “Entitled Workers”. 


Someone who falls into none of these categories (for example, the genuinely self-employed, or someone who works through an intermediary such as an umbrella company) is not entitled to join an employer’s workplace pension scheme. Instead, they must organise any retirement savings themselves, for example, by taking out a personal or stakeholder pension. 


It is unlawful to ask a job applicant if they plan to opt out of auto-enrolment, or to treat workers detrimentally if they seek to enforce their pension rights. It is also unlawful for a recruitment agency to suggest that success could depend on whether a job applicant opts out. 




An employer can opt to delay enrolling staff into a pension scheme for up to three months. They must write to each individual telling them that their auto-enrolment is being “postponed”. Postponement enables employers to avoid triggering auto-enrolment obligations for short-term or seasonal workers, or until a new joiner has completed their probation period. 



The TUC welcomed the introduction of auto-enrolment, while recognising that the scheme is far from perfect. In particular, many part-time workers (mostly women) do not earn enough to be enrolled automatically (although they can ask to join). Low-paid workers with more than one employer also lose out, because earnings from different jobs are not added together to reach the £10,000 threshold. Finally, excluding the self-employed and those who contract through intermediaries, such as umbrella companies or personal service companies, provides another spur to work arrangements that are designed to avoid employment rights (see Chapter 2).