The legislation applies to everyone who works or ordinarily works in the UK under a contract of employment. The legislation distinguishes between the following different types of worker:
- Eligible jobholders - aged between 22 and State Pension Age (SPA); earning above the annual earnings trigger for auto-enrolment, currently £10,000 p.a. These individuals must be auto-enrolled into a scheme to which minimum contributions1 are paid.
- Jobholders – aged between 16 and 21 or between SPA and 74; earning above £10,000 p.a. or aged between 16 and 74; earning above £6,032 p.a. for the 2018/19 tax year but below £10,000 p.a. These individuals have a right to opt in a scheme to which minimum contributions are paid.
- Entitled workers - aged between 16 and 74; earning below £6,032 p.a. for the 2018/19 tax year. These individuals have a right to join a scheme, but there is no obligation for minimum contributions to be made.
Minimum contributions are being phased in. Up to April 5, 2018 the minimum contribution was 2 per cent of qualifying earnings, of which at least 1 per cent had to be an employer contribution2. From April 6, 2018, the minimum contribution is 5 per cent of qualifying earnings, of which at least 2 per cent must be an employer contribution. From April 6, 2019, the minimum contribution will be 8 per cent of qualifying earnings, of which at least 3 per cent must be paid by the employer.
|Minimum employer contribution||Minimum total contribution|
|Up to 5 April 2018
|6 April 2018 to 5 April 2019
|6 April 2019 onwards
From April 6, 2018, qualifying earnings are earnings (defined in the PA 2008) between £6,032 p.a. and £46,350 p.a.
Certain categories of person may not be workers and may need further evaluation; for example, where the individual does not work normal hours in a regular place of work, casual workers, agency workers, and individuals on zero-hours contracts. In addition, employees whose existing pension benefits have special protection under various Finance Acts need not be auto-enrolled. For multi-national employers, advice may be needed on whether an employee is working or ordinarily works in the UK.