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Pegasus Blog

Assessing your employees for auto enrolment

DATE

August 9, 2013

In last week’s post we looked at staging dates and the options of bringing your staging date forward or postponing it for up to three months. Now we’re looking at the important task of assessing your employees and knowing who you actually need to enrol.

Groups of workers 

In the previous post we talked about the different categories of workers. Eligible jobholders, non-eligible jobholders and entitled workers – who are they and who do you need to enrol? 

1. Eligible jobholders: Auto enrolment only applies to employees who are classed as eligible jobholders. Eligible jobholders are employees between the age of 22 and state pension age, with earnings over the auto enrolment threshold (£9,440). 

At your staging date you must enrol all eligible jobholders into a qualifying pension scheme and both you and the employee will make contributions into it.

2. Non-eligible jobholders: Non-eligible jobholders represent employees aged between 16 and 74, with earnings below the auto enrolment threshold (£9,440) but above the qualifying earnings lower threshold (£5,668). Employees aged 16 to 21, or state pension age to 74, with earnings above the auto enrolment threshold (£9,440), are also classed as non-eligible jobholders. 

Non-eligible jobholders aren’t auto enrolled, but they can opt into a qualifying pension scheme if they wish to. In these circumstances, both the employer and the employee will make contributions.

3. Entitled workers: The third and final category of workers is entitled workers. Entitled workers are employees aged between 16 and 74 with earnings below the qualifying earnings lower threshold (£5,668). These employees must be provided with information on their right to join a pension scheme. However, employers aren’t obliged to make contributions to the pension scheme if they do join.

Assessing your employees for auto enrolment  

Let’s look at how you can assess your employees and determine which category they fall into. Whatever the size of your company, the assessment of your employees must be accurate and you must be able to provide records to demonstrate transparency. There are two main ways to assess your employees.

1. Manual assessment – if you choose to manually assess your employees you’ll need to take the information on each of your employees from your PAYE system, review it and transcribe it or re-key the information into a record. If you only have a small number of employees then manual assessment would be a good option to consider, but it wouldn’t be recommended for larger employers as it could take weeks or months and there’s a high risk of errors occurring.

2. Automating the process by employees – many payroll software solutions, such as Opera 3, now allow employee records to be automatically categorised into eligible jobholder, non-eligible jobholder or entitled worker. This approach improves accuracy and reduces risk and would be more suitable for larger employers. 

The next article in our auto enrolment series will look at the next step to auto enrolment compliance - selecting a qualifying pension scheme, such as NEST Pensions and enrolling your employees into it.

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