With the auto enrolment in full swing now as a bureau we work with a large number of different providers and have agent platforms set up which enable us to upload pension contributions from correctly formatted csv files.
For Auto enrolment employees are split into various categories which identifies their status and whether or not they have to be auto enrolled.
These are :
aged between 22 and the State Pension Age with earnings above the "earnings trigger".
EITHER aged between 16 and 22 or between the State Pension Age and 75, and with earnings above the "lower level of qualifying earnings", OR aged between 22 and State Pension Age, and with earnings above the "lower level of qualifying earnings" but below the "earnings trigger".
aged between 16 and 75 with earnings below the "lower level of qualifying earnings" .
Earnings trigger: currently £10,000 per annum, £833 monthly, or £192 weekly.
Lower level of qualifying earnings: currently £6,032 per annum, £503 monthly, or £116 weekly.
Our experience in working with auto enrolment pensions means we can access employees to ensure they are correctly enrolled.
As well as assessing employees there is applying the correct tax relief basis to the pension, again there are various types.
If the pension scheme does not allow for tax relief on their members pension contributions (a very unusual circumstance), but in the majority of cases you should select one of the remaining 3 options instead.
For pension schemes where the pension provider claims tax relief on behalf of the employee and adds it to the employee’s pension pot. You need to determine whether your particular pension scheme operates the ‘relief at source’.
If the pension scheme operates under ‘Net Pay Arrangement’ conditions (i.e. the pension deduction is taken before the calculation of tax, so that tax relief is claimed via the payroll).
Salary sacrifice is an arrangement where a worker agrees to give up part of their salary and in return their employer pays it into their pension pot as part of their employer contributions. Because of this the worker receives a lower salary. You should take specialist advice before deciding to use a salary sacrifice scheme which meets HMRC requirements and complies with your employer duties.
One other consideration is the Earnings Basis, this determines what portion of employees pay is pensionable, for this there are 2 options.
If you wish the pension contribution to be calculated on all pensionable earnings (i.e. from the first pound of pensionable earnings). This option gives the employer the option to opt for certain types of irregular or non guaranteed payments to be non pensionable i.e. annual bonus, overtime where voluntary, other additional payments.
If you wish the pension contribution to be calculated on qualifying earnings only – i.e. those earnings falling between the Lower and Upper thresholds for automatic enrolment. This operates similarly to NI where no contributions are due up to the lower threshold and are only paid on earnings up to the upper threshold. From an employer’s point of view this maybe be useful to reduce employers contributions, however the drawback is that when using this method all types of earnings are pensionable (you cannot be selective) so all additional taxable payments become taxable up to the threshold.
Below is the current qualifying parameter’s.
We can help determine which scheme your provider operates and ensure the correct scheme tax relief basis and earnings basis is applied to your pension.
Once in place we can either provide you with a csv. file in the correct format to upload each pay period or as an agent we can upload for you.