WELCOME TO BONI ACCOUNTANTS

Employees will fall under one of the three categories:

• Eligible jobholder: These are workers aged between 22 and the State Pension Age with earnings above the “trigger” (currently £10,000 per annum, £833 monthly, or £192 weekly).

 Employer’s responsibility:

• Automatically enrol

• Make ongoing employer contributions to the scheme

• Non-eligible jobholder: These are workers aged between 16 and 74 have qualifying earnings below the “trigger” for automatic enrolment,

OR are aged between 16 and 21, or state pension age and 74 have qualifying earnings that are above the “trigger” for automatic enrolment.

Employer’s responsibility:

• Give information about the right to opt in and the right of an entitled worker to join

• If the non-eligible jobholder decides to opt in:

  • Arrange pension scheme membership

  • Make ongoing employer contributions to the scheme

• Entitled workers: These are workers aged between 16 and 75 with earnings below the “lower level of qualifying earnings” (currently £5,824 per annum, £486 monthly, or £112 weekly).

Employer’s responsibility:

• Give information about the right to opt in and the right of an entitled worker to join

• If the entitled worker decides to join, arrange pension scheme membership

• The employer does not have to make ongoing employer contributions to the scheme

In summary, all the employees have the right to opt in, but it is only the eligible jobholders which this is automatic. If the employee is in the pension scheme (automatically enrolled or opt in) the employer must make contributions unless they are an entitled worker.

The minimum contributions for any person for any month can be worked out as follows:

Earnings for the month less £485 = pensionable pay, then:

Multiple pensionable pay by 1% = minimum employer contribution.

Multiple pensionable pay by 0.8% = minimum employee contribution (if paying net of tax*).

*The reason the employee contribution is 0.8% instead of 1% is that the government top up the employee contributions with basic rate tax.  This is fair as the employer contribution attracts corporation tax relief so the net cost of the employer contribution is also only 0.8% after taking account of the reduction in corporation tax. The percentages will increase from 1 October 2017.

Important note:  you, and any employee, may want to make contributions above the minimum.  If the employee or the employer makes contributions above the minimum, the other does not have to match the higher contribution.