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, four-weekly, fortnightly or weekly.
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.
If you meet the criteria later, for example you turn 22 or you start to earn more, and you are not already a member, your employer will automatically enrol you.
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, you will pay more.
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, it will make 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 the 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 to 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. If you wish to opt out, you will have to do so each time your employer must re-enrol you.
You will be auto-enrolled into the scheme. If you opt out, you will be re-enrolled every three years.
If you are not eligible, for example, because you work in the independent sector, you will be auto-enrolled into the employer’s pension scheme unless you choose to opt out.
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.
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.
