Your auto enrolment questions answered

There are three different categories of worker, determined by their age and how much they earn and there are different requirements for each.

  • Eligible jobholder - must be automatically enrolled into an auto enrolment scheme
  • Non-eligible jobholder - has the right to opt in to an auto enrolment scheme
  • Entitled worker - has the right to join a pension scheme

For more information see What is the effect on my workforce?, What are my employer duties? and our Identifying workers factsheet.

A: You don't have to pay contributions for an entitled worker but you must give them the option to join a pension scheme.

If a non-eligible jobholder decides to join the scheme you must make contributions on their behalf, of at least the minimum employer contribution level.

You must pay contributions of at least the minimum employer contribution level for eligible jobholders who are automatically enrolled.

For more information on the three categories of worker see What is the effect on my workforce?

A: Yes, there are two types of exclusions which are:

1. People who are treated as workers but are not covered by the employer duties:

  • those who do not work or ordinarily work in the UK
  • those under 16, and
  • those aged 75 and over.

2. People who are not treated as workers so the employer duties don't apply to them:

  • the self employed
  • members of the armed forces, and
  • directors of companies unless they have a contract of employment to work for that company and there is anyone else employed by the company under a contract of employment.

A: Yes. Even if you have an existing pension scheme that is better than the minimum standard you'll still have employer duties to perform - for example telling existing members how auto enrolment will affect them and automatically enrolling new workers.

A: The minimum contribution level required to meet the quality requirement can be based on a band of earnings called qualifying earnings or alternatively you can certify that your scheme meets the minimum requirements using a scheme definition of pensionable salary.

9% of pensionable salary
  • You can use a scheme definition of pensionable salary
  • Contributions must be calculated from the first pound of pensionable salary.
  • Pensionable salary must be at least basic salary.1
8% of pensionable salary2
  • You can use a scheme definition of pensionable salary.
  • Contributions must be calculated from the first pound of pensionable salary.
  • Pensionable salary must be least basic pay.1
7% of total earnings2
  • All earnings must be pensionable.
  • Contributions must be calculated from the first pound of earnings.
8% of qualifying earnings
  • Contributions must be calculated on the band of qualifying earnings between £5,772 and £41,865.

1 Basic pay must include earnings before deductions such as tax and National Insurance, holidays and some statutory benefits but doesn't have to include variable pay such as bonuses, overtime and commission.

2 Earnings must include everything that's included in the definition of qualifying earnings.

For more information, see the contributions section of our website.

A. 'Qualifying earnings' is a reference to earnings of between £5,772 and £41,865 (for 2014/15 tax year) made up of any of the following components of pay that are due to be paid to the worker:

  • salary
  • wages
  • commission
  • bonuses
  • overtime
  • statutory sick pay
  • statutory maternity pay
  • ordinary or additional statutory paternity pay
  • statutory adoption pay.

The assessment of whether a component of pay constitutes an element of qualifying earnings is for you to make.

As an alternative to 'Qualifying earnings', you could use certification to meet minimum requirements as part of the qualifying criteria.

For more information, see our Qualifying earnings factsheet.

A: The contract of employment will determine the employer. If there is no contract in place, it's whoever is responsible for paying the worker or whoever actually pays the worker.

For more information, see our Identifying Workers factsheet.

A: Each employer will be required to fulfil their employer duties separately, ignoring any other employment or earnings that the worker has.

A: The employer duties apply to these workers each time work is undertaken.

For example if you employ a worker for three months, then employ them again six months later, the employer duties will apply on both occasions.

A: These workers will generally need to be assessed by reference to their age, how you pay them and how much they earn.

For example if you normally pay workers every Friday for work done between Saturday and Friday, you would have to work out how much the workers earned between Saturday and Friday to determine what particular employer duties apply.

A. You have a duty to assess your workforce to identify the types of worker you employ and the duties you'll have to carry out. For a maximum of three months, postponement gives you the option to defer:

  • the assessment of your workers or
  • the auto enrolment date for workers who have been assessed.

This allows you to smooth the administration of your employer duties and align it with your existing business processes. For example you can use postponement to:

  • stagger the assessment of workers at your staging date
  • align the assessment of workers with your payroll processes
  • avoid having to assess seasonal workers or those with one-off spikes in earnings
  • avoid calculating pension contributions on part month earnings.

You can use postponement with the whole workforce, groups of workers or individuals.

See our Postponement factsheet for more details.

A: Where the contract of employment is genuinely for a period of less than three months and the worker has not joined or opted in during the waiting period, your employer duties fall away at the end of the contract.

Where you re-employ a worker, you can operate the waiting period again if you wish and don't have to take into account any previous waiting periods.

See our Postponement factsheet for more details.

A: Yes. Any worker can stop making contributions to a pension scheme at any time. However they will not receive a refund of the contributions they've made if the pension scheme is a contract-based scheme, such as a Group Personal Pension.

Where the pension scheme is a trust-based scheme, under current rules the worker may be able to get a refund.

A: Designing an efficient joining process will help to minimise the number of refunds you might have to make. When we implement your scheme, we'll agree the best way to set up your joining process taking account of your payroll processes.

A: No. All of the employer duties apply regardless of the pension scheme type. For more information on NEST, see our NEST factsheet.

How Royal London can help

A. We offer a comprehensive system for you to enrol your workers and satisfy your employer duties. Find out more about our auto enrolment service.

A: Our research has shown that most small to medium sized employers will look for a single, uniform solution for their entire workforce. This is particularly the case where there is already a pension scheme in place; we expect that these employers will want as little change as possible.

Royal London will work with you to deliver the best solution for you in the most cost-effective way. There may be some circumstances where NEST has a valuable role to play, for example employers that have a large number of low paid workers or high staff turnover.

Like other providers, we are working closely with NEST to establish if there are opportunities to provide an integrated solution in these circumstances. As a minimum we will provide an extract that can be used with NEST.

A: Yes. We provide a data extract that payroll providers can use.

A: Please contact:

  • Email: ebcsc@royallondon.com
  • Telephone: 0131 652 5370 8.00am to 6.00pm Monday-Thursday and 8.00am to 5.00pm on Friday.
  • Postal address: Royal London EBC Service Centre
    Royal London House Alderley Road Wilmslow SK9 1PF
Last updated: 22 Oct 2014
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The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England and Wales number 99064. Registered office: 55 Gracechurch Street, London EC3V 0RL.