What is auto-enrolment?
Legislation requires every employer in the UK to automatically enrol their employees into a qualifying pension scheme - if they are not already in one - and contribute to that pension.
Who qualifies for auto-enrolment?
Employers must automatically enrol an employee who:
• is not already in a qualifying pension scheme at work
• is aged between 22 and state pension age
• ordinarily works in the UK
• pays income tax and National Insurance contributions from their wages
• earns £10,000 or more in a year in that employment.
The earnings threshold will be pro-rated meaning the actual earnings threshold amount will differ if you are paid monthly, 4 weekly, fortnightly or weekly.
What happens if I don’t meet the above criteria?
If you do not fulfil the above criteria, you will not be automatically enrolled, but you may still qualify for a workplace pension as a non-eligible jobholder or entitled worker – if so, you can join the pension scheme if you wish. Your employer will be able to tell you if you qualify.
What happens if I meet the automatic qualifying criteria later?
If you meet the criteria later, for example you turn 22 or you start to earn more, and you are not already a member, then your employer will automatically enrol you.
How much will I have to contribute?
The minimum auto-enrolment contribution level is four per cent of qualifying earnings (between £6,240 and £50,270 in 2021/22). Employers can choose to base pension contributions on your whole pensionable pay. You will receive tax relief on your pension contributions. If your employer’s auto-enrolment scheme has higher contributions, then you will pay more.
How much will my employer have to contribute?
Employers must contribute a minimum of three per cent of qualifying earnings (between £6,240 and £50,270 in 2021/22). Again, if the employer bases contributions on pensionable pay then it will pay its contributions on your whole pensionable pay.
Teachers and support staff can continue to opt out of the Teachers’ Pension Scheme (TPS), Local Government Pension Scheme (LGPS) or their employer scheme after auto-enrolment. Employees who are a non-eligible jobholder or entitled worker have right to ask to join their organisation’s pension scheme. Employers should not be encouraging or pressurising employees to opt out. It is solely the individual’s prerogative to join or not join the scheme.
Although teachers and support staff can still opt out of their respective pension schemes, the employer must automatically re-enrol you at least once every three years. Therefore, if you wish to opt out you will have to do so each time your employer must re-enrol you.
What does this mean for support staff eligible to join the LGPS?
You will be auto enrolled into the LGPS. If you opt out, you will be re-enrolled every three years.
What does this mean for support staff not eligible to join the Local Government Pension LGPS?
If you are not eligible, for example, because you work in the independent sector, you will be auto enrolled into the employer’s auto-enrolment pension scheme unless you choose to opt out.
What does this mean for teachers eligible to join the TPS?
Teachers eligible to join the TPS (for example those employed by local authorities or academies) will be auto enrolled into the TPS. If you opt out, you will be re-enrolled every three years.
Independent schools which are accepted schools also have to auto-enrol new teachers into the TPS. The Government intends to legislate its phased withdrawal proposal which will allow independent schools to stop entry into the TPS for new members but leave existing staff in the TPS. The date of introduction is not certain but is expected to be 1 September 2021.
What does this mean for teachers not eligible to join the TPS?
If you are not eligible, for example, because you work in an independent school outside the TPS, you will be auto enrolled into the employer’s auto-enrolment pension scheme unless you choose to opt out.
Additional information about auto-enrolment can be found from the Pensions Advisory Service.