There are 3 types of workers affected by the reforms: eligible jobholders, non-eligible jobholders and entitled workers. Only eligible jobholders will have to be automatically enrolled but the other 2 groups also have certain rights under the new law.
1. Eligible jobholders
They must be automatically enrolled into a pension scheme by their employer. Whilst initial enrolment is compulsory, jobholders can choose to opt out afterwards. Their employer must also contribute to the pension scheme.
These workers will be those that are:
• aged between 22 and their state pension age
• working or ordinarily work in the UK
• earning more than £7475 a year (amount will be reviewed annually)
2. Non-eligible jobholders
They have a right to join the company’s automatic enrolment pension scheme. These are workers who fall outside the criteria for automatic enrolment. However, they have the right to opt in and the employer must contribute to their pension scheme if they do.
3. Entitled workers
They can choose to join a pension scheme but the employer does not have to contribute to the scheme. These workers earn below £5,035 a year and are therefore not eligible for automatic enrolment. The pension scheme offered by their employer also doesn’t have to be the same one used for automatic enrolment.
For more information about different types of workers and how to assess your workforce visit The Pensions Regulator’s website: www.thepensionsregulator.gov.uk