Smarter accounting

Auto enrolment categories of workers

22 February 2015, Auto Enrolment, Charities, Companies, Employer, Sole Traders

Who is entitled to a pension?

The three auto enrolment categories of workers are defined by their age and earnings.  Each category is explained in the table below.  Workers must be assessed each pay reference period (pay day) and anyone moving from one category to another must be dealt with according to the regulations.

Just like bees, human workers are divided into different types - auto enrolment categories of workers only applies to humans

Entitled worker

An entitled worker can request to join a pension scheme.  The employer is not required to pay contributions.

Non-eligible jobholder

A non-eligible jobholder can opt in to an automatic enrolment pension scheme.  Employers are obliged to pay contributions if the employee instructs deductions to be made from their pay.

Eligible jobholder

An eligible jobholder must be automatically opted in to an automatic enrolment pension scheme.  The eligible jobholder can only opt out after they have been enrolled.

Contribution rates and thresholds

The Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2015 draft legislation sets out the proposed thresholds for qualifying earnings in 2015/16.  Anyone above the lower threshold has a right to auto enrolment minimum contributions of 2% (1% employer) rising to 8% (3% employer) based on qualifying earnings.

Qualifying Earnings Thresholds for Auto-Enrolment

2016 - 2017Annual1 weekFortnight4 weeks1 month1 quarterBi-annual
Lower level of qualifying earnings£5,824£112£224£448£486£1,456£2,912
Earnings trigger for automatic enrolment£10,000£192£384£768£833£2,499£4,998
Upper level of qualifying earnings£43,000£827£1,654£3,583£3,583£10,750£21,500

Auto enrolment categories of workers

ANNUAL AGE
EARNINGS 16 – 21 22 – State pension age State pension age – 74
Less than or equal to £5,824 Entitled worker
Over £5,824 and up to £10,000 Non-eligible jobholder
Over £10,000 Non-eligible jobholder Eligible jobholder Non-eligible jobholder

Alterledger can manage your auto-enrolment process

You will need to assess your workforce every pay period, with severe penalties if you fail to act properly.  This can be a complicated process and should be managed together with your general payroll procedures.  Alterledger can deal with all your payroll and auto-enrolment needs and save you time and money to spend on your own business.  Please get in touch using the form below for more information.

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