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Glossary

Alternative quality requirements

An alternative contribution basis to the relevant quality requirements – see Sets.

Assessment date

The date an employer will have to assess a worker for their eligibility for enrolment into the workplace pension scheme.

Automatic enrolment

The process of automatically signing employees up to a qualifying pension scheme.

Automatic enrolment scheme

A workplace pension that is a qualifying scheme and provides contributions which at least meet the relevant quality requirements. An agreement between the employer and the pension supplier is required for personal pension type schemes.

DWP

Department for Work and Pensions.

Declaration of Compliance

The online process for employers to notify the Pensions Regulator that they are fulfilling their employer duties.

Certification

An alternative for employers who have good quality money purchase schemes which do not explicitly meet the relevant quality requirement. Employers can certify using Set 1, Set 2 or Set 3.

Eligible jobholders

Workers aged between 22 and their state pension age, who ordinarily work in the UK with qualifying earnings above the trigger for automatic enrolment.

Entitled worker

An individual who is entitled to join a pension scheme because they are aged 16 to 75 and ordinarily work in the UK, with earnings below the lower earnings threshold.

Inducements

Any action taken by an employer with the sole or main purpose of inducing a jobholder to opt out or cease membership of an automatic enrolment scheme.

Jobholder

Anyone aged between 16 and 75, who ordinarily works in the UK with qualifying earnings.

Lower earnings threshold

The floor of the qualifying earnings band, currently £5,824.

Non-eligible jobholder

A worker who is not eligible for automatic enrolment but has the right to opt in.

NEST

National Employment Savings Trust (NEST) is the name of the national workplace pension scheme. NEST operates as a centralised scheme, as a not-for-profit trustee corporation.

Opt in

This is the process for a jobholder to actively join their workplace pension scheme.

Opt out

Jobholders can choose to opt out of their workplace pension once they've been automatically enrolled. They can normally only opt out during the opt out period.

Opt out period

A one calendar month period, during which jobholders can opt out and get a full refund of any employee contributions. It starts from whichever date is the later of:

  • the date active membership was achieved; or
  • the date they received your letter with the enrolment information.

Pay reference periods

The period of time over which a worker is normally paid (e.g. calendar monthly, weekly or half weekly).

Pensionable earnings

The definition of earnings used by an employer to calculate pension contributions.

Pensions Regulator

The Pensions Regulator is the UK regulator of work-based pension schemes.

Phasing

Application of minimum contribution rate until October 2018.

Postponement

A method of deferring automatic enrolment. This can be for up to three months from a worker’s assessment date.

Qualifying criteria

Usually a registered UK occupational pension scheme or personal pension scheme. Charges must also be capped at 0.75% (annual management charge) for any pension scheme to be compliant with automatic enrolment.

Qualifying earnings (QE)

The earnings upon which assessments are based. Also used as the minimum definition of pensionable earnings (currently a band of earnings between £5,824 and £42,385).

QEs include basic pay, salary, commission, bonuses, overtime, and statutory sick pay, statutory maternity, paternity and adoption pay.

Qualifying pension scheme

A scheme which meets the qualifying criteria and the relevant quality requirements.

Relevant quality requirements (RQR)

Under the relevant quality requirements the total contribution (after phasing) is 8% of qualifying earnings, at least 3% of which must come from the employer.

Re-enrolment

Every three years employers must automatically enrol eligible employees who have previously opted out. Employers have three months on either side of the re-enrolment date to re-enrol qualifying employees.

Safeguards

To protect workers from unfair treatment, inducement or prohibited recruitment conduct in connection with the employer duties.

Sets

An alternative contribution basis to the relevant quality requirements:

Set 1* – Minimum contributions of at least 9% of basic pay (at least 4% of which must be from the employer)

Set 2* – Contributions of at least 8% of pensionable pay (at least 3% of which must be from the employer), provided that pensionable pay constitutes at least 85% of total earnings at scheme level

Set 3* – Contributions of at least 7% of total pay (at least 3% of which must be from the employer)

*After phasing

Staging date

The date an employer is required by law to start automatic enrolment. This will depend on the size of the employer and their employer PAYE reference.

Upper earnings threshold

The ceiling of the qualifying earnings band, currently £42,385.

Worker

An individual who either works under a contract of employment, or has a contract to perform work or services personally (i.e. cannot sub-contract or send substitute) and is not undertaking work as part of their own business.

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