Auto enrolment categories of workers
22 February 2015, Auto Enrolment, Charities, Companies, Employer, Sole Traders
Smarter accounting
Smarter accounting
22 February 2015, Auto Enrolment, Charities, Companies, Employer, Sole Traders
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.
An entitled worker can request to join a pension scheme. The employer is not required to pay contributions.
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.
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.
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.
| 2016 - 2017 | Annual | 1 week | Fortnight | 4 weeks | 1 month | 1 quarter | Bi-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 |
| 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 |
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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Telephone: 0141 443 4581 advice@alterledger.co.uk
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