Auto Enrolment Jargon You Need to Know
Auto enrolment can feel overwhelming, especially when technical terms are thrown around without explanation. But understanding the categories of workers involved in auto enrolment is crucial for compliance and for supporting your team. Let’s break down the key definitions so you can stay ahead with confidence.
Understanding Your Auto Enrolment Employee Categories
The auto enrolment categories of workers are based on two main criteria: their age and earnings. Each category has different rules and employer responsibilities, so it’s important to know which applies to your workforce.
1. Eligible Jobholders
These are employees who must automatically be enrolled into a qualifying pension scheme. To fall into this category, a worker must:
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Work in the UK
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Earn more than £10,000 per year (this is called the Earnings Trigger)
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Be aged between 22 and State Pension Age
If a worker meets all three conditions, both you (the employer) and the employee are required to contribute to the pension scheme.
2. Non-Eligible Jobholders
Non-eligible jobholders aren’t automatically enrolled, but they do have the right to opt in to an auto enrolment pension scheme. These workers include:
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Those aged 16 to 21, or over State Pension Age but under 74, earning more than £10,000, or
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Those aged 22 to State Pension Age earning between £6,240 and £10,000
Once they opt in, employers must contribute to their pension just like with eligible jobholders.
3. Entitled Workers
Entitled workers can choose to join a pension scheme, but this doesn’t have to be an auto enrolment scheme. They are:
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Aged 16 to 74
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Earning less than £6,240 per year
In this case, you don’t have to contribute, even if they decide to join a scheme. However, you are still required to provide them with information about their rights.
Real-World Examples: Applying the Auto Enrolment Rules
Understanding the rules is one thing—but how do they play out in real scenarios? Let’s look at two examples that highlight how auto enrolment status can change over time.
Reaching Age 22
Simon is 20 years old and earns above the earnings trigger. Although he meets the income threshold, he is not yet eligible for automatic enrolment due to his age.
However, Simon can choose to opt in. His employer must inform him of his rights and be ready to act when Simon turns 22. Once he reaches that age—and assuming his earnings remain above the threshold—Simon must be automatically enrolled.
Earning Qualifying Earnings
Jasmine is 27 and works part-time. Initially, her earnings are below the qualifying threshold, so she isn’t automatically enrolled. However, as her circumstances change and she begins earning more, her status also changes.
Once Jasmine’s earnings exceed the £10,000 trigger, her employer is required to automatically enrol her in the pension scheme as she now qualifies as an eligible jobholder.
Final Thoughts
Understanding auto enrolment worker categories is essential for staying compliant and supporting your staff’s long-term financial wellbeing. As workers’ earnings and ages change, so too can their enrolment status—so it’s crucial to monitor regularly.
For further detailed guidance on auto enrolment, Contact Us Today.
📌 Stay tuned! In our next blog, we’ll cover more jargon that every employer needs to understand when managing workplace pensions.