Contributions

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01 / 4 / 2015 Midnight

Eligible jobholders must be automatically enrolled into a qualifying pension scheme and the employer must make contributions. See below for information on contribution levels and timescales.

Contribution levels

As an employer, you must:

  • pay employees' contributions to the scheme within statutory timescales for making contributions
  • pay employer contributions in line with the schedule of contributions (NHS Pension Scheme, NHSPS) or payment schedule (alternative scheme).

If you fail to pay contributions as above and this failure results in a significant material change then a report from the trustees or scheme managers must be sent to The Pensions Regulator.

Non-eligible jobholders can choose to opt in to a qualifying scheme and the employer must arrange membership and make contributions in respect of them. Entitled workers can join a pension scheme, however this does not need to be a qualifying pension scheme and the employer does not have to make contributions on their behalf. The NHS Pension Scheme will be the qualifying pension scheme for the majority of NHS employees, this is a defined benefit scheme and there is no change to the employer contribution level.

NEST and Standard Life are examples of Alternative Qualifying Pension Schemes and they are defined contribution (DC) schemes. There are many pension providers in the marketplace and employers are free to choose from a wide range of qualifying pension schemes. Employers must pay statutory minimum contribution levels to the alternative qualifying pension scheme but can pay more.

Contributions to the alternative scheme (once fully phased-in) will be at least 8 per cent of the jobholder's qualifying earnings (of which the employer must pay at least three per cent). Qualifying earnings are all earnings of wages/salary, bonuses, overtime, commission and the statutory pay elements, between the lower  and upper earning thresholds. Earnings above and below these limits do not need to be included in the calculation unless the rules of the scheme require it.

 Timescale Employer minimum contribution
Total minimum contribution
Employer's staging date to 30 September 2017
  1%
  2%
1 October 2017 to 30 September 2018
  2%
  5%
 1 Oct 2018 onwards
  3%
  8%

Timescales for processing contributions

Under automatic enrolment legislation, employers have up to one calendar month to ensure active membership is achieved and backdated to the staging date. However, contributions must be deducted within the same pay period that active membership is achieved. Regardless of what point in the joining window active membership is created for the eligible jobholder, it must take effect from the automatic enrolment date. This means that contributions are due on that part of the earnings paid from the automatic enrolment date to the end of the “pay reference period” and in each subsequent pay reference period.

Please note that from the 1 November 2013 employers have the right to use an alternative definition of pay reference period for both assessing jobholder status and determining whether a scheme is a qualifying scheme.

As from 1 July 2012, any eligible jobholder contributions that have been deducted must be paid across to the trustees or managers of the pension scheme by the 22nd day (for electronic payments) or 19th day (for cheque and cash payments) of the month after deduction. However, employee contributions deducted from an eligible jobholder during the 'automatic enrolment opt-out window' do not have to be paid over until the end of the second month after the month of automatic enrolment.

This means that if the eligible jobholder opts out in the ‘automatic enrolment opt-out window’ the employer can refund the employee contributions and will not have to get the employer and employee contributions back from the NHSPS as they will not by then have been paid over to the NHSPS or AQPS.

If earnings fall to nil, no contributions may be paid for that period. If active membership ceases however, the employer may need to start the process of assessing the worker again.

This is to identify the first time that the criteria to be an eligible jobholder are met after active membership ceased and therefore when automatic enrolment is triggered at age 22 or when the worker meets the automatic enrolment trigger.

Employers must achieve active membership for the worker on the date they meet the eligibility criteria. Under automatic enrolment legislation, employers have up to one calendar month to ensure active membership is achieved and backdated to the date eligibility is reached. However, contributions must be deducted within the same (weekly or monthly) pay period that active membership is achieved.

Example for monthly paid staff (paid on the last working day of the month):

  •  Organisation’s staging date is 1 April 2013
  • Worker achieves active membership Monday 1 April 2013
  • Contributions must be taken at the latest on Tuesday 30  April 2013
  • Example for weekly paid staff (paid each Friday)
  • Organisation’s staging date is 1 April 2013
  • Worker achieves active membership Monday 1 April 2013
  • Contributions must be taken at the latest on Friday 5 April 2013.

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