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 successful roll-out of pensions auto-enrolment, which began in 2012. 


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 (2018-19); 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 an auto-enrolment scheme. 




The employer must make pension contributions to 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 employers must 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 earning over the £10,000 earnings threshold; and



• aged between 16 and 74 earning over the lower level of qualifying earnings (£5,876) 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 are increasing gradually. They will increase in April 2018 and again in April 2019. Details can be found 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 (£5,876) can join a workplace pension scheme, but it need not be the auto-enrolment scheme and the employer need not make a contribution.



It is unlawful to ask a job applicant if they plan to opt out, or to treat workers detrimentally if they seek to enforce their pension rights. It is also unlawful for any employer or representative such as 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. 


The TUC celebrated 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. In addition, excluding the self-employed and those who contract through intermediaries such as umbrella companies or personal service companies, provides another spur to work arrangements designed to avoid employment rights and tax (see Chapter 2, pages 37-42).