Here we have a list of terminology associated with Auto Enrolment.
Each piece of terminology has a brief description of what the word or phrase means.
Auto Enrolment:
This is the term used to describe the changes to pensions, where companies will automatically enrol eligible jobholders into a qualifying workplace pension scheme.
Workplace Pensions:
This is the pension scheme setup for your retirement that’s arranged by the employer. Both the employee and employer can contribute.
Staging Date:
This would be the date by which companies should start enrolling eligible jobholders into a qualifying pension scheme.
Postponement:
Employers can postpone their staging date but only under certain circumstances. Postponement allows employers to avoid difficult pro-rated calculations. It also helps with refunding of contributions when people opt out in a different tax year to the one in which the deduction was made.
Contributions:
This is what both the employee and employer will pay into the employee’s pension pot. See the ‘Contributions’ section of this guide for more detail.
Qualifying Earnings:
These are earnings used to identify if an employee is an eligible or non-eligible jobholder and the level of pension contributions. This includes: basic pay, wages, salary, bonuses, overtime, commission and any maternity/paternity/adoption/sick pay.
Opt Out:
Employees who qualify for auto enrolment or who have been automatically enrolled can choose to opt out of the pensions if they so wish.
Opt In:
Certain employees can choose to opt in to the pension unless they are already an active member of a qualifying pension scheme.
Net Pay Agreement and Relief at Source:
These refer to the employee tax relief on the pension.
- Net Pay Arrangement
This means the employee receives tax relief by taking the contribution on the gross amount of pay ( e.g. at 1%). - Relief at Source
This pension means the employee will pays less (e.g. 0.8%) and the government gives the remaining (0.2%) amount into your pension pot.
The Pensions Regulator:
They are the UK regulator of workplace pensions. They are responsible for auditing companies ensuring that employers are compliant with the law surrounding auto enrolment.
NEST:
The National Employment Savings Trust is a pension provider available to all employers who want to use them. They offer a pension scheme designed for automatic enrolment that any UK employer can use to meet their new workplace pension duties, no matter what the size of the organisation.
Eligible Jobholder:
Is an employee who earns enough to pay into an auto enrolment scheme. An employee must earn over £112 a week / £486 a month to be able to choose to enrol. To be automatically enrolled an employee must earn over £192 a week / £833 a month.
Pay Reference Period:
This is the period in which employees are assessed to see what contributions will be taken for that month. This can either be aligned to the companies calendar or the HMRC tax calendar.
If an employee is paid on the 11th of each month and you are aligned with your companies calendar, then your pay reference period will be from the 12th of the month until the 11th of the next month. The alignment of your calendar will relate to the payslip dates and not when the employee did the work.
If you are aligned to the HMRC tax calendar then your pay reference period will run from the 6th till the 5th.
