What are the criteria for an employee to qualify for a workplace pension scheme?

Businesses that don’t enrol eligible employees onto a workplace pension scheme are breaking the law, make sure that you’re familiar with the criteria for enrolment.

Pension auto-enrolment is a government scheme that was introduced under the Pensions Act 2008.

The scheme makes it compulsory for employers to auto-enrol all eligible employees into a pension scheme and pay money into the scheme for them.

The first employers began auto-enrolling employees under the scheme in 2012. Enrolment was phased in from 2012 until 1 February 2018. All businesses should now be auto-enrolling employees who meet the criteria.

What are the criteria for auto-enrolment?

Employees are eligible for a workplace pension and should be automatically enrolled if they meet the following criteria:

  • Aged between 22 and state pension age.
  • Earn more than £10,000 a year.
  • Work in the UK.

When an employee is enrolled into a workplace pension scheme, they will pay a set percentage of their wage into the scheme. Their employer and the government will also contribute a set percentage.

Employees can opt out of the scheme if they wish to, but they must first be opted in.

Can employees that don’t meet the criteria still opt-in?

Employees that earn less than £6,136 (for the tax year 2019-2020) can opt into their employer’s workplace pension scheme, but the employer does not have to contribute.

Employees that earn between £6,136 and £10,000 can opt-in to the scheme, and if they’re aged between 16 and 74, their employer is required to then contribute to their scheme.

Employees aged 21 and under may opt-in and their employer will be required to contribute to their scheme providing that they are earning over £6,136.

For more help or advice with workplace pension auto-enrolment and employee eligibility, get in touch with our team here at Michael Bell Accountants and we’ll be happy to help.