Automatic Enrolment Earnings Thresholds Review And Revision

On September 6th 2012, the Department for Work and Pensions (DWP) launched a consultation on automatic enrolment thresholds for 2012/13, aimed at employers, employee representatives and pension industry professionals, including scheme administrators, payroll administrators, accountants, payroll bureaux, Independent Financial Advisors and employee benefit consultants.

The consultation document sets out the revision factors that the Secretary of State may take into account in the annual review of the automatic enrolment earnings trigger and the qualifying earnings band; the Government’s approach; the evidence base and the proposed rates for 2013/2014. The consultation ends in October.

The DWP also recently consulted on proposals to exempt European employees from auto-enrolment in the UK. The proposals suggest exempting employers from having to auto-enrol employees who are subject to the social and labour laws of another European Economic Area (EEA) country.

However, this could mean that employers with EEA employees would have to factor them in when designating schemes for auto-enrolment, otherwise, they may have to make pension contributions they would otherwise be exempt from paying. Although this only applies to around 9,000 employees in the UK, of whom around 2,000 would probably opt out anyway, according to the DWP.

A statement from the DWP said: “To offer a pension to a qualifying person, a UK occupational pension scheme must be able to comply with the social and labour laws relevant to the field of occupational pensions of the other EEA state. This can be complex and costly, and our understanding is that very few schemes currently offer cross-border provision.”

Recent regulations have exempted dual status workers from auto-enrolment. A dual status worker is one who works in the UK and another EEA state and whose contract is subject to the law of that other EEA state.