The phrase "We're all in" has been used a lot with auto enrolment, which can only be seen as implying that every person in work should be or is obligated to be enrolled into a work place pension. Is this really the case?
The short answer is NO, and I'll explain why.....
So, do we all have to be in? The answer is NO.
Only Eligible Jobholders have to go in automatically - and they can OPT OUT. No one else is required to go in a pension and no one, regardless oif their age and earnings, has to remain in a pension.
Eligible jobholder: aged between 22 and the State Pension Age with earnings above the "earnings trigger".
Non-eligible jobholder: EITHER aged between 16 and 22 or between the State Pension Age and 75, and with earnings above the "lower level of qualifying earnings", OR aged between 22 and State Pension Age, and with earnings above the "lower level of qualifying earnings" but below the "earnings trigger".
Entitled workers: aged between 16 and 75 with earnings below the "lower level of qualifying earnings" .
Earnings trigger: currently £10,000 per annum, £833 monthly, or £192 weekly.
Lower level of qualifying earnings: currently £6,032 per annum, £503 monthly, or £116 weekly.
Directors, can be looked at in isolation.
Some of the rules here show this -
If the only people working for the company are a married couple or civil partners and both are directors, they will both be workers if they both have contracts of employment with the company. If only one of them has an employment contract, or neither of them does, then neither of them will be workers and the company will not be an employer.
In the case of a company where one spouse or civil partner is the director and the other holds the office of company secretary (please note this is not the same as simply performing general secretarial work, which would not be exempt), exemption from automatic enrolment will depend on whether contracts of employment are held by each spouse or civil partner.
A number of different circumstances might arise, for example:
if both are directors and neither has a contract of employment, both will be exempt
if both are directors and one has a contract of employment but the other does not, both will be exempt
if one is a director and the other is not, and both have contracts of employment, the one who is a director will be exempt but the one who is not a director will not be exempt (depending on their age and earnings, they may qualify for automatic enrolment and need to be put into a pension)
if both have contracts of employment, neither is exempt and the company will have duties for both of them, even for a spouse or civil partner who is a director (although the company can choose not to automatically enrol a director - see below)
if one holds the office of company secretary but is not a director, they are only exempt if they do not have a contract of employment (for example, because they only perform the official duties of their office, such as submitting the annual return to Companies House)
if the company secretary has a contract of employment, they would not be exempt even if the contract only applies to additional work that they do over and above their official responsibilities
What is the definition of a director?
When referring to a director, we mean anyone holding office as a director. This does not include a person who is a director in name only.
In the case of a company, it means a director formally appointed under the Companies Act 2006, and also anyone acting as a director in the sense of having a decision-making role in the corporate governance of the company, even if they have not been properly appointed.
If you find you don't have any duties under the Auto Enrolment rules, then we advise that the best course of action is to file a simple online form on the Pension Regulator Site, found here.
This will prevent you from receiving communications from them, which you can do without. You should, however, be mindful that should your circumstances change then you may find that duties become obligatory.
Feel free to drop us a line and we can assist you to cut through the red tape.