How to segment your workforce for auto-enrolment
The obligations you have towards your workers will vary depending on which of the following three categories they fall into:
1. Eligible jobholders
An eligible jobholder is any worker who receives earnings in a pay period equivalent to annual earnings of more than £10,000 a year (2017/2018) and is aged between 22 and their State Pension Age. They should be auto-enrolled into your workplace pension and you should make contributions on their behalf.
You are required to send them information about their auto-enrolment and ensure they receive the Terms & Conditions from your chosen pension provider.
Once enrolled, eligible jobholders have the right to opt out of your workplace pension by completing an opt-out notice. Where this is completed within the first month of being enrolled you must arrange a full refund of any contributions taken (regardless of any investment gain or loss) less tax and National Insurance.
A record will need to be made of employees who are opting out so they can normally be re-enrolled on the next three-year anniversary of your company's staging date.
2. Non-eligible jobholders
A non-eligible jobholder is any worker who receives earnings in a pay period equivalent to annual earnings of between £5,824 and £10,000 (2017/2018).
Workers who earn more than the equivalent of £10,000 and are aged 16 to 21 or between their State Pension Age and 75 are also non-eligible jobholders.
These workers do have the right to opt in to your workplace pension if they wish, in which case you will need to treat them as an eligible jobholder.
You are required to send them information about their right to opt in to your workplace pension: those employees who wish to opt in will need to notify you in writing.
3. Entitled workers
An entitled worker is a worker between the age of 16 and 75 who receives earnings in a pay period equivalent to annual earnings of less than £5,824 (2017/2018).
They have the right to join your workplace pension if they wish, but there's no obligation for you to contribute to their pension.
You are required to send them information about their right to join your workplace pension - those employees who wish to join the scheme will need to notify you in writing if they wish to do so and may need to complete an application form.
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