Which employees qualify for automatic enrolment into a pension scheme?
The pensions auto-enrolment provisions apply to workers. A worker is defined for these purposes as as an individual who works under a contract of employment or any other contract to perform work or services personally for another party, where that other party is not a client or customer of a profession or business undertaking carried on by the individual.
Workers who are eligible for automatic enrolment into a qualifying pension scheme are known as "eligible jobholders". To fall within the eligible jobholder category, a worker must satisfy certain requirements by reference to his or her age and earnings. He or she must be:
- aged between 22 and the state pension age;
- working or ordinarily working in the UK; and
- earning above a certain amount (currently set at £10,000 per annum).
Workers who are not eligible for auto-enrolment will fall into one of two categories. They will be either a "non-eligible jobholder" or an "entitled worker", depending on their level of earnings. Non-eligible jobholders can choose to opt in to a qualifying scheme and the employer must arrange pension scheme membership and make contributions in respect of them. Entitled workers can also join a pension scheme. However, this does not need to be a qualifying pension scheme under the auto-enrolment rules and the employer does not have to make contributions on their behalf.
The Pensions Regulator's detailed guidance on Employer duties and defining the workforce includes further information on the different categories of workers.
Employers need to carry out a contractual analysis to determine how their workforce divides into the different categories.