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What does 'auto-enrolment' mean?
'Auto-enrolment' is a quick way of describing the duties that apply to all employers to automatically enrol all their eligible workers into pension schemes (from 2018, even to the very smallest). This duty covers all workers who:
- are not already in a pension at work;
- are aged 22 or over;
- are under State Pension age;
- earn more than £10,000 a year; and
- work in the UK.
Now that auto-enrolment has been introduced, if you are eligible you should be enrolled into a workplace pension automatically without having to arrange one for yourself. All employers have to automatically enrol eligible workers into a workplace pension and contribute to their pension, by 2018 that applies even the very smallest employer.
If you are a worker, you are either enrolled automatically or you can apply to join the auto-enrolment scheme or you can apply to join some sort of workplace pension scheme, depending on how much you get paid and your age.
Government advice can help you decide if you are a worker and, if you are, the law on pensions puts you into one of three groups:
- Eligible Jobholder: You are at least 22 but under State Pension age and earn more than the earnings trigger for automatic enrolment – you will be automatically enrolled and contributions will be made on your behalf. In 2017-18, the earnings trigger was £10,000.
- Non-eligible job holder: You are aged between 16 and 74 and earn more than the lower level of qualifying earnings, but less than the earnings trigger for automatic enrolment – you can apply and must be allowed to join the scheme so contributions will be made on your behalf. In 2017-18, the lower level of earnings was £5,876. Alternatively, you are aged between 16 and 21, or between State Pension age and 74, and earn more than the earnings trigger for automatic enrolment.
- Entitled worker: You are aged between 16 and 74, but earn the lower level of qualifying earnings or less – you can apply and are entitled to join a workplace pension scheme but contributions won't necessarily be made on your behalf. In 2017-18, the lower level of earnings was £5,876.
If you have been automatically enrolled into a workplace pension scheme, you can opt out, but the employer will no longer have to make contributions on your behalf, so you will not benefit from that extra pay. If you are eligible three years later, your employer will have to re-enrol you.