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4626. Work Place Pension Usage Terms
 
  • 1 Staging Date: This is the date when an employer's Auto Enrolment/Workplace Pension duties begin. The date is set by the Pension Regulator.

  • Enrolment Date: This is the date on or after the Staging Date when an employee and employer, OR only employee, OR only employer, begins to contribute to the Workplace Pension scheme.

  • 2 Deferment Date: The employer has the right to delay the enrolment date for contributions to the Workplace Pension scheme for up to three months from the Staging Date or the employee's employment start date.

  • 3 Eligible jobholder: This is any employee who is working in the UK and is between the age of 22 and state pension age and who earns above the threshold of £10000.00 annually. Any such employee will be auto-enrolled into the Workplace Pension Scheme.

  • 4 Non-eligible jobholder:
    This is either
    • an employee who does not have to be auto-enrolled into a Workplace Pension due to his age which is between 16 and 21 years old or 67 to 74 years old earns either £10000.00 or above, or
    • an employee who is aged between 16 and 74 years old and whose earnings are between £6240.00 and £10000.00. Such an employee can also opt in to contribute for a Workplace Pension and the employer will also have to make a contribution.

  • 5 Entitled Worker: This is an employee who is aged between 16 and 74 years old and is earning below £6240.00. He/she has the right to contribute to a Workplace Pension if they want to. In such cases the employer is not obliged to contribute to the Workplace Pension Scheme.

  • 6 Opt-In: When an Eligible Job holder who has previously asked to leave the scheme after being enrolled now chooses to contribute to the Workplace Pension Scheme. Also, when a Non Eligible employee chooses to contribute to the Workplace Pension.

  • 7 Opt-Out: When an employee has the right to decide to leave the Workplace Pension Scheme within a month of being auto-enrolled.

  • 8 Net Pay Arrangement Approach: This is where Workplace Pension Contributions are taken from an employee's gross pay, before tax and NI.

  • 9 Relief at Source approach: This is where Workplace pension contributions are deducted from net pay, after tax and NI, The pension provider will then claim 20% income tax relief on the employee's behalf from the Government and add to the employee's pension pot. This approach benefits those employees whose annual income is lower than £6240.00 where they don't pay tax yet receive tax relief.

  • 10 Qualifying Earnings: This is a band of earnings between £6240.00 and £50000.00 which pension contributions are usually based on. They include basic pay, bonus, commission, any statutory pay including SSP and SMP, SPP etc.

  • 11 All Pensionable Earnings: Where all earnings in the pay period are to be considered for pension contribution calculations including Bonuses, Commission, overtime, etc.

  • 12 Basic Earnings: Basic earnings are the earnings of the employee excluding any fluctuating income such as bonuses, commission, overtime etc. Workplace Pension contribution will be calculated on Basic earnings only.

  • 13 Formal Assessment: An employer must assess their employees to work out if they are eligible for automatic enrolment.

  • Reassessment date (Re-Enrolment date): Reassessment takes place three years from the Staging Date and every three years thereafter. Employers must re-enrol back into the Workplace pension scheme any employees who have left the scheme and then send a Re-declaration of Compliance to the The Pension Regulator.

  • 14 Comm Letter (Communication letter): Within 6 weeks of an employer's duties start date, the employer has a legal duty to write to all employees individually to explain how automatic enrolment applies to them. Whilst the pension provider may be willing to do this, an employer may provide their own letter to the employees.

  • 15 Re-Declaration of Compliance: Whether or not the employer has employees to put back into a Pension scheme scheme, they must complete a Re-declaration of Compliance to tell The Pension Regulator how they have met their duties. They must declare what they have done to comply within 5 months from the third anniversary of the Staging Date or automatic enrolment duties start date.