Sunday the 15th September 2019 was Pension Awareness Day

In the past, many workers missed out on valuable pension benefits, because their employer didn’t offer them a pension or they didn’t apply to join their company’s pension scheme.

Automatic enrolment changed this. It makes it compulsory for employers to automatically enrol their eligible workers into a pension scheme. The employer must also pay money into the scheme.  

Is every worker eligible to join? If you are not already in a qualifying workplace pension scheme, you will be automatically enrolled into a pension scheme if you meet the following criteria; You are aged between 22 and State Pension age. You earn at least £10,000 per year.

Qualifying earnings is the name given to a band of earnings that you can use to calculate contributions for auto enrolment. For the 2019/20 tax year this is between £6,136 and £50,000 a year. The figures will be reviewed every year by the government.

If you’re using qualifying earnings, you’ll contribute a percentage of your worker’s gross annual earnings that fall between £6,136 and £50,000. The first £6,136 of their earnings isn’t included in the calculation. For example, if a worker earns £20,000 their qualifying earnings would be £13,864.

This means that qualifying earnings can’t be more than £43,864 (£50,000 minus £6,136) for the 2019/20 tax year. These are annual figures. Because you pay contributions every time you pay your workers, you’ll need to work out qualifying earnings for each pay period in turn. You’ll use the pro- rata figures to calculate contributions.

Make sure if you have employee’s that you are operating auto- enrolment properly, remember if employees are eligible, they MUST be auto enrolled, then if they wish to opt out that is their choice , but they must be enrolled as soon as they are eligible.