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The Pensions Regulator has advised that it is undertaking spot-checks on businesses that have already automatically enrolled their staff. These are to check compliance but it is also highlighting the importance of making sure businesses are compliant with on-going obligations, including monitoring the ages and earnings of employees.

 

In its guidance the Regulator highlights under the section Keep track of age and earnings changes that must be monitored:

  • 128. Changes in age and earnings may see a worker move between the different categories of worker. The employer duties in relation to that worker will therefore change. For this reason, it is important to monitor age and earnings – this is especially important for workers who earn below the qualifying earnings threshold, or who are under 22 years old.
  • 129. An employer will need to put procedures in place to monitor when their workers move from one category of worker to another, and alert them as to what this means in practice.

Employers’ on-going duties are to identify whether a person is a worker and the category they fit within. Their obligation will be to issue the appropriate communication to each category of worker (eligible jobholders, non-eligible jobholders or entitled workers) and pay the appropriate contribution for any eligible jobholders or non-eligible jobholders.

Eligible jobholders
These are workers who:

  • are aged at least 22 but under state pension age
  • are working or ordinarily work in the UK under their contract
  • have qualifying earnings payable by the employer in the relevant pay reference period that are above the earnings trigger for automatic enrolment.


Non-eligible jobholders
These include workers who either:

  • are aged between 16 and 74
  • are working or ordinarily work in the UK under their contract
  • have qualifying earnings payable by the employer in the relevant pay reference period but below the earnings trigger for automatic enrolment.

or

  • are aged between 16 and 21, or state pension age and 74
  • are working or ordinarily work in the UK under their contract
  • have qualifying earnings payable by the employer in the relevant pay reference period that are above the earnings trigger for automatic enrolment.


Entitled workers
They are called this because they are ‘entitled’ to join a pension scheme. These are workers who:

  • are aged between 16 and 74
  • are working or ordinarily work in the UK under their contract
  • do not have qualifying earnings payable by the employer in the relevant pay reference period.

 

The current earnings as set out in THE AUTOMATIC ENROLMENT (EARNINGS TRIGGER AND QUALIFYING EARNINGS BAND) ORDER 2017 2017 No. 394 are:

2017-18 Annual threshold
Lower level of qualifying earnings £5,876
Earnings trigger for automatic enrolment £10,000
Upper level of qualifying earnings £45,000

 

From October new employers – including all new limited companies – will have instant pension duties and obligations. These businesses will need to put pension plans in place. Advisers should update new company checklists for the requirements and consider using the new online suite of information and tools made available by the Pensions Regulator.

 

It is important to remember that even those businesses with no employees in a pension scheme will still have a legal requirement to complete a declaration of compliance online within five months of their duties start date.

Article from ACCA In Practice