Glossary of Terms Auto enrolment is full of new terminology (or jargon). Whilst we have tried to keep any industry jargon to a minimum, we have prepared this glossary to help you understand the terms you may hear or see about automatic enrolment. Assessment The process of identifying whether an Earnings trigger The earnings trigger sets the point
13
when someone becomes eligible to be automatically enrolled into a qualifying workplace pension. The government reviews these every year and revises them if appropriate. Eligible jobholder Employees who are aged between 22 and state pension age and earn over the automatic enrolment earnings trigger. All eligible jobholders need to be automatically enrolled. Entitled worker Employees who earn less than the lower threshold (currently £490 or below per month). These employees have the right to join a scheme but employers are not obligated to contribute on their behalf. Gross qualifying earnings (assessment) Gross qualifying earnings are the gross earnings paid or payable for the pay reference period. Inducement Action taken by an employer where their main purpose is to encourage an employee to opt out of a pension scheme. Opt-in The process where a non-eligible jobholder elects to join the company’s pension scheme.
employee is to be automatically enrolled or given the right to join a pension scheme. Automatic enrolment earnings trigger The earnings threshold used when assessing an employee. Declaration of Compliance The online declaration to The Pensions Regulator that an employer has completed their obligations. Employers have up to 5 months from their staging date to complete this. Default fund Defined contribution schemes, such as group personal pension arrangements need to offer a suitable investment fund for individuals who are automatically enrolled into a pension scheme. Defined Benefit (DB) scheme A type of pension scheme where the amount of benefit at retirement is known in advance and usually based on earnings and years of service (e.g. final salary). Defined Contribution (DC) scheme A type of pension scheme where the contributions are set and the level of benefit is unknown until retirement.
Made with FlippingBook HTML5