Each year, the government reviews the level of earnings at which employers must include their employees in statutory pension schemes.
So, what’s the plan for tax year 2022/23?
All employers have to comply with auto-enrolment if they have any employees who meet the criteria (referred to as “workers”). There are a number of important thresholds that govern when employees are entitled to join an employer pension scheme. Two of the most important are the earnings trigger and the qualifying earnings band lower limit.
The earnings trigger is the point at which an employer must auto-enrol an employee into a pension scheme. If the employee earns less than this trigger amount, they can still ask to be enrolled, and the employer must do so.
If they earn less than the lower limit, they can request to be enrolled, but the employer has no obligation to make employer pension contributions.
The lower limit has been frozen at £6,240 (£520 per month) for 2022/23 (the tax year ending on 5 April 2023). This means that employees who pay no tax or NI may need to be enrolled, if they request it.
The earnings trigger has been frozen at £10,000 (£833 per month) for 2022/23. As the national minimum wage rate has increased, this is a decrease in the trigger in real terms. Consequently, it’s expected that an additional 17,000 workers will need to be auto-enrolled in 2022/23.
There are significant fines for not complying with the auto-enrolment rules, so you’d be well advised to identify any staff that are just below the trigger this year and prepare to bring them into a qualifying pension scheme if needed.
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