A detailed guide to Automatic enrolment for software developers

Transcription

1 A detailed guide to Automatic enrolment for software developers April 2014

2 Contents About this guidance 4 Introduction 5 Using the guidance 6 page 1.0 A brief overview of the employer duties and defining the workforce The new duties for employers The different categories of workers Postponement 14 The deferral date 16 Choosing a deferral date Automatic re-enrolment 17 The cyclical automatic re-enrolment date 19 Who to automatically re-enrol Specification of core payroll-driven calculation routines Overview Further guidance assessment of qualifying earnings 26 Identify the relevant pay reference period 28 Definition of pay reference period aligned to the tax periods 28 Definition of pay reference period aligned to the period by reference to which the worker is paid their regular wage or salary 44 Identify what is payable in that period 48 Compare what is payable with the lower level of qualifying earnings and the earnings trigger for automatic enrolment 52 Definition of pay reference periods aligned to tax week or months at the change in the tax year 56 Qualifying earnings payable before 6 April 59 Assessment dates that fall in both pay reference periods 60 Changing from one definition of pay reference period (for the purposes of assessment) to another Pension contributions 69 The relevant pay reference period for a minimum requirement pension scheme 73 Definition of pay reference period (contribution entitlement) aligned to the employer s staging date 74 Definition of a pay reference period (contribution entitlement) aligned with tax weeks or months 81 Definition of pay reference period (contribution entitlement) aligned with the period by reference to which the jobholder is paid their regular wage or salary 105 Changing from one definition of a pay reference period (contribution entitlement) to another 117 A detailed guide to Automatic enrolment for software developers 2

3 Contents page Changing both the definition of a pay reference period (assessment) and the definition of a pay reference period (contribution entitlement) at the same time 123 Time limits for paying contributions Automation of the assessment process 129 Start and end of assessment process 133 New starters 133 Employment ends/75 birthday/state pension age birthday 134 Payroll run and pay date in different pay reference periods 143 Assessment process late in the joining window 147 Pay reference periods (assessment) of six weeks or less 149 Pay reference periods (assessment) longer than six weeks 149 Non-standard pay reference periods (definition of a pay reference period (assessment) aligned to period by reference to which the worker is paid) 150 Errors 151 Backdated pay 152 Advances of pay 153 Supplementary payrolls 153 Making the first deduction Data sources 164 Data source: automatic enrolment data 164 Data source: worker data Calculation routines Report capabilities 228 Declaration information 231 Re-declaration information Record-keeping requirements Specification of data/routines for wider business support software Overview Data sources Calculation routines Report capabilities Record-keeping requirements 275 Annex A: pay reference period calendars where the definition of pay reference periods is aligned with tax weeks or months 276 Annex B: data driven from software systems for inclusion in information packages 282 Annex C: changes since the last version of this guidance 284 A detailed guide to Automatic enrolment for software developers 3

4 About this guidance This guidance is aimed at software developers involved with payroll applications and wider business applications, for example HR and pensions administration, that may be involved in supporting an employer in complying with their new automatic enrolments duties. It is of particular relevance to developers with employer customers who have fewer than 50 persons in their PAYE scheme. This is because with the staggered introduction of the new duties employers with between 50 and 249 persons in their PAYE scheme will become subject to the new duties during the current financial year. Employers with fewer than 50 persons in their PAYE scheme will become subject to the new duties during the financial year. This guidance is a comprehensive guide to the key concepts in automatic enrolment included in the core payroll routines and wider routines supporting the end-to-end duties. It describes the employer duties using a technical notation and may not be suitable for a more general readership. For a more general readership we have published a series of guides that cover all aspects of the new pension duties for employers. These are available at In addition, we have a range of short introductory information and online tools available at This version of the Software guide has been updated with the qualifying earnings thresholds and earnings trigger for automatic enrolment figures for the tax year. As a result of the changes in these figures we have made some minor changes to content. Annex C provides details of the significant changes made to this guidance. This guide will be updated to reflect changes to the values of the qualifying earnings thresholds and the automatic enrolment trigger point, and any other relevant legislative change. Developers can sign up to the news-by- service on the regulator s website to find out when the guide has been updated and published: A detailed guide to Automatic enrolment for software developers 4

5 Introduction 1. This guide is designed to help software developers update their products to support their employer customers in complying with their new pension duties in the Pensions Act It is aimed at developers with any type of software product that employers may rely on to help them comply with their new pensions duties (eg payroll, HR or pensions administration software). 3. This guide pays particular attention to payroll routines because employers will need to accurately assess their workers earnings and make pensions contributions to comply with their duties. 4. Payroll software is expected to play a key role to enable employers to do this. 5. Discussions with software providers have indicated that payroll software is likely to support employers to comply with the core automatic enrolment duties to a large extent. However, some systems may not be able to support the full range of employer duties. 6. In its communications to employers, The Pensions Regulator ( the regulator ) will encourage employers to seek further information from their payroll software provider about the extent their existing software will support them to comply with the duties. 7. With the staggered introduction of the new duties (see paragraphs 25 to 28), it is crucial for software developers with products used by employers with fewer than 50 workers to take immediate action based on the information in this guide. Employers with fewer than 50 persons in their PAYE scheme will become subject to the new duties during the financial year. A detailed guide to Automatic enrolment for software developers 5

6 Introduction Please note This guide is not intended to be a definitive way of complying with the duties of the Pensions Act The Pensions Regulator cannot provide a definitive interpretation of the law; only express a view. The guide is designed to assist business software providers in developing software to enable their customers (employers) to comply with their duties. Any alternative approach to that appearing in this guide will nevertheless need to meet the underlying legal requirements. Using the guidance 8. The guidance for software developers is a comprehensive guide to the key concepts in automatic enrolment included in the core payroll routines and wider routines supporting the end-to-end duties. It describes the employer duties using a technical notation and may not be suitable for general readership. 9. This guidance is divided into three sections. The first is an introduction to automatic enrolment, providing a brief summary of the new duties for an employer and the different categories of worker for whom they will have these duties. The second section provides guidance on the core functionality requirements of payroll routines and the third section covers the wider end-to-end support of the duties. 10. In our view payroll software may automate core functionality which will support an employer in complying with their duties. This is covered in section 2 of the guide. This core functionality is: the assessment of eligibility for automatic enrolment and reenrolment (age, earnings and pension membership) and other worker types the identification of the automatic enrolment date and the enrolment date (opt in) the deduction of pensions contributions according to pension scheme rules refunds following opt-out. A detailed guide to Automatic enrolment for software developers 6

7 Introduction 11. In section 2 the focus is on the first two bullets above as these are less established functionality for payroll routines. 12. We have also published an updated test data companion that accompanies this guide for software developers. The test data companion provides fictitious case studies that illustrate some of the more complex scenarios in the core functionality in section In addition other business applications such as HR or pensions administration software may automate elements of the end-to-end duties to support employers, primarily information requirements which are covered in section We have structured sections 2 and 3 so that they contain: Overview a brief summary of what is covered in each section and assumptions made. Further guidance (section 2 only) this outlines the assessment process and the application of the key features of the requirements that underpin the calculation routines. Specification of calculation routines data items listed in tabular form with technical notation supported by a brief description. There are either two or three tables of worker data items or system derived data items. The calculation routines described in each section make use of: a. Automatic enrolment data (section 2 only), and b. Worker data c. Data derived by the payroll (or other) system. Reports capability a summary of the suggested outputs from the calculation routines for an employer to progress action in order to comply with their duties. Record-keeping the records within the calculation routines that will support an employer in complying with the requirement to keep records for automatic enrolment. 15. In most cases the brief description in the specification of calculation routines will cover all the relevant points but in a minority of cases this guidance will refer software developers to the detailed guidance for employers for more information. In any event if developers would like further explanation of the requirements including examples and flow charts they should refer to the detailed guidance for employers. A detailed guide to Automatic enrolment for software developers 7

8 Introduction 16. In the specification of the calculation routines we assume that the calculations are being run for every worker each time payroll is run. The approach in this guidance is one way of achieving the necessary function within the system. However, there may be other ways to achieve the same function. It is for developers to decide what is appropriate within their system(s). 17. The next section provides a brief summary of the new duties for employers and the different categories of workers for whom the employer has these duties. Section 2 on page 24 details the specification of data and calculation routines for the core functionality. A detailed guide to Automatic enrolment for software developers 8

9 1.0 A brief overview of the employer duties and defining the workforce 18. In this section we provide a brief overview of: the new duties for employers paragraphs 19 to 24 implementation of the new duties paragraphs 25 to 29 the definition of worker and the different categories of worker paragraphs 30 to 38 postponement paragraphs 39 to 59, and cyclical automatic re-enrolment paragraphs 60 to The new duties for employers 19. The new employer duties mean that an employer of a worker (see paragraph 30 for the definition of a worker ) will have to: automatically enrol any eligible jobholder into an automatic enrolment scheme, following a prescribed process. The pension scheme must meet certain criteria and the employer will be obliged to make employer contributions to the scheme make arrangements to establish active membership of an automatic enrolment scheme, if a jobholder (eligible or noneligible) chooses to opt in to a pension scheme. The pension scheme must meet certain criteria and the employer will be obliged to make employer contributions to the scheme make arrangements to establish active membership of a pension scheme if an entitled worker chooses to join give information to their workers about how the different duties affect them declare compliance (register) with the regulator to state what they have done to comply with their new duties process any opt outs from the pension scheme, including refunds of contributions ensure they do not take any action or make any omission by which the jobholder ceases to be an active member of the qualifying scheme ensure they do not take any action or make any omission by which the scheme ceases to be a qualifying scheme A detailed guide to Automatic enrolment for software developers 9

10 1.0 A brief overview of the employer duties and defining the workforce automatically re-enrol any eligible jobholders who opted out or ceased active membership, after a certain amount of time (approximately every three years). 20. In addition, an employer of a worker will be able to choose to use postponement to delay automatic enrolment by a period of up to three months. 21. There are also a number of safeguards in place to protect the rights of individuals. The safeguards mean employers must ensure: they do not take any action for the sole or main purpose of inducing a jobholder to opt out of a qualifying scheme, or a worker to give up membership of a pension scheme (this is known as inducement ) that during recruitment, they or their representative do not ask any questions or make any statements that either state or imply that an applicant s success will depend on whether they intend to opt out of the pension scheme (this is known as prohibited recruitment conduct ) they do not breach new employment rights for individuals not to be unfairly dismissed or suffer detriment on grounds related to the new employer duties. 22. In addition to the employer duties and safeguards, an employer must keep certain records about how they have met the duties. 23. This guidance does not cover the safeguards or the duties for an employer to: ensure they do not take any action or make any omission by which the jobholder ceases to be an active member of the qualifying scheme ensure they do not take any action or make any omission by which the scheme ceases to be a qualifying scheme as these aspects are less suitable for expressing in software/ business rules terms. 24. This guidance also does not cover the rules and calculations for immediate automatic re-enrolment. Immediate re-enrolment is required when a jobholder ceases active membership of a qualifying pension scheme or the scheme ceases to be a qualifying scheme and it is not of the jobholder s own account. An automated system cannot know the reason why active membership has ceased and so it is not included here. Cyclical automatic re-enrolment which occurs broadly every three years is included in the guidance (see paragraphs 60 to 78 for more information on cyclical automatic re-enrolment). A detailed guide to Automatic enrolment for software developers 10

11 1.0 A brief overview of the employer duties and defining the workforce 25. The new employer duties will be introduced in stages and started in Each employer is allocated a date through the operation of the law from when the duties will first apply to them, known as their staging date. The safeguards apply to every employer from 1 July The staging date is based on the number of people in an employer s PAYE scheme so employers with the largest numbers of person s in their PAYE scheme will have the earliest staging date. Employers with fewer people in their PAYE scheme will have later staging dates. For more information on staging see Detailed guidance no. 2 Getting ready. 27. Each employer will be contacted directly in advance of their staging date by the regulator. Employers can notify the regulator to bring forward their staging date. 28. Most employers cannot move their staging date backwards under any circumstance. The exception is where an employer meets the definition of small employer. The legislation describes a particular type of small employer for the purposes of staging. A small employer is an employer who had fewer than 50 workers on 1 April 2012 and who had or was part of a PAYE scheme, or schemes, in which there were more than 50 persons on 1 April A small employer who matches the description above would ordinarily have an earlier staging date if their PAYE scheme was either not shared or only contained workers. For this reason, a small employer can choose to keep their original staging date or move it to a later new prescribed date so that it becomes their modified staging date. For more information see Detailed guidance no. 2 Getting ready. 29. It is apparent from the list of duties in paragraph 19 that the action an employer has to take under automatic enrolment varies depending upon what type of worker they have an eligible jobholder, non-eligible jobholder or entitled worker. It is key for an employer and for any developer of a business application supporting an employer customer in meeting their duties to understand the different categories of worker. The starting point for this is understanding who is a worker for automatic enrolment. A detailed guide to Automatic enrolment for software developers 11

12 1.0 A brief overview of the employer duties and defining the workforce 1.2 The different categories of workers 30. In automatic enrolment, a worker is defined as any individual who: works under a contract of employment (an employee), or has a contract to perform work or services personally and is not undertaking the work as part of their own business. 31. Anyone who has entered into a contract of this type (sometimes referred to as a contract of service ) with an individual is an employer and will be required to comply with the new employer duties. 32. For some types of workers there are special rules, ie, offshore workers, seafarers and members of the armed forces. For more information about the definition of a worker see Detailed guidance no. 1 Employer duties and defining the workforce. 33. The employer is responsible for ensuring that they have identified all those working for them who meet the definition of worker as workers. And they are responsible for fully discharging any duties arising in respect of that worker. Once an employer has identified that they have a worker, the next step is to ascertain what type of worker they have. 34. There are two main categories of worker for which the employer duties apply: jobholders entitled workers. 35. The category of jobholder then further subdivides into two groups: eligible jobholders non-eligible jobholders. 36. The category into which a worker falls is determined by their age and whether they earn qualifying earnings. See table 1 below for the criteria for each category. A detailed guide to Automatic enrolment for software developers 12

13 1.0 A brief overview of the employer duties and defining the workforce Table 1 The different categories of worker Category of worker Worker Jobholder Change An employee or someone who has a contract to perform work or services personally, that is not undertaking the work as part of their own business. A worker who: is aged between 16 and 74 is working or ordinarily works in the UK under their contract has qualifying earnings. Eligible jobholder Non-eligible jobholder A jobholder who: is aged between 22 and state pension age has qualifying earnings above the earnings trigger for automatic enrolment. A jobholder who: is aged between 16 and 21 or state pension age and 74 has qualifying earnings above the earnings trigger for automatic enrolment or is aged between 16 and 74 has qualifying earnings below the earnings trigger for automatic enrolment. Entitled worker A worker who: is aged between 16 and 74 is working or ordinarily works in the UK under their contract does not have qualifying earnings. NB: Qualifying earnings is a reference to earnings of between 5,772 and 41,865 (for the tax year) made up of any of the following components of pay that are due to be paid to the worker: salary wages commission bonuses overtime statutory sick pay statutory maternity pay ordinary or additional statutory paternity pay statutory adoption pay. A detailed guide to Automatic enrolment for software developers 13

14 1.0 A brief overview of the employer duties and defining the workforce 37. The employer duties apply in respect of: eligible jobholders non-eligible jobholders entitled workers. 38. The illustration below shows how the different categories of worker relate to each other. (Note that the size of the components is not indicative.) Workers Entitled workers Eligible jobholders Jobholders Non-eligible jobholders 1.3 Postponement 39. Postponement is an additional flexibility for an employer that allows them to choose to postpone automatic enrolment for a period of their choice of up to three months. 40. To exercise that choice, the employer must issue the worker or workers with a postponement notice. There are three options with varying levels of information. 41. Postponement can only be used for a worker on certain dates: The employer s staging date, in respect of any workers employed on their staging date The first day of employment, in respect of any worker starting employment after the employer s staging date The date a worker employed by them meets the criteria to be an eligible jobholder after the employer s staging date. 42. Postponement cannot be used at automatic re-enrolment. 43. In addition, an employer can use postponement where they have applied the transitional period for schemes with defined benefits to a worker. For more information on the transitional period see Detailed guidance no. 3b Transitional period for schemes with defined benefits. A detailed guide to Automatic enrolment for software developers 14

15 1.0 A brief overview of the employer duties and defining the workforce 44. In this guidance the dates on which postponement can be used are given specific titles: Worker postponement this covers postponement at an employer s staging date, at the worker s first day of employment or for an employer using the transitional period for schemes with defined benefits for a worker on the date with effect from which arrangements for active membership fall to be made under the transitional period, and Eligible jobholder postponement this covers postponement at the date that the criteria to be an eligible jobholder are met after the employer s staging date. 45. The reason for this is that only eligible jobholder postponement can be repeated and so this needs different rules. This distinction and these terms are not used in the detailed guidance for employers. 46. An employer could use postponement to: smooth the process of staging, eg automatically enrol groups of workers at different points in the three-month period align automatic enrolment with their existing payroll processes, eg to avoid calculation of contributions on part-period earnings, or to maximise the amount of the opt-out period that falls before payroll is run smooth the process of the automatic enrolment duty in respect of workers with rare spikes in earnings smooth the process of the automatic enrolment duty in respect of short-term workers who leave soon after starting work, or workers who trigger automatic enrolment just before ceasing employment smooth the process of fulfilling the information requirements, eg use the postponement notice to fulfil a number of the different information duties for a worker in one go. 47. Once the employer has decided that they are going to use postponement and the type of notice they are going to use the employer then needs to decide on the deferral date. (The different types of postponement notices are described in section 3: Specification of data sources/calculation routines for wider business support.) A detailed guide to Automatic enrolment for software developers 15

16 1.0 A brief overview of the employer duties and defining the workforce The deferral date 48. The deferral date is the last day of the postponement period. It is key for the employer as it is the date on which they must assess the worker and it must be included in the postponement notice. 49. The deferral date is a date of the employer s choosing up to three months after: the day after the employer s staging date, if they are choosing to use postponement on their staging date in respect of any workers employed on their staging date the day after the first day of employment, if they are choosing to use postponement on the first day of employment in respect of any worker starting employment after the employer s staging date the day after the date the criteria to be an eligible jobholder are met, if they are choosing to use postponement on the date a worker employed by them meets the criteria to be an eligible jobholder after the employer s staging date the day after the date with effect from which arrangements for active membership fall to be made under the transitional period for schemes with defined benefits. This is only applicable if the employer has applied the transitional period for schemes with defined benefits to the worker. 50. The employer may choose any duration of postponement up to the maximum allowed. Months means calendar months. For example, if the employer s staging date is 1 October, the latest possible deferral date they can choose is 1 January. 51. In this guidance the deferral date is expressed in a different notation to that set out in the detailed guidance for employers. It corresponds to Worker postponement end + one day or eligible jobholder postponement end + one day. This is because of the use of flags to prevent action by the employer as a result of an assessment done during the postponement period and the need to remove the flag so that action can be triggered. Choosing a deferral date 52. An employer can choose their deferral date to suit their existing processes and their reason for choosing postponement subject to it being within the three month period. 53. If, for example, an employer is using postponement to avoid partperiod calculation of contributions, they should ensure the deferral date is the first day of a pay reference period. A detailed guide to Automatic enrolment for software developers 16

17 1.0 A brief overview of the employer duties and defining the workforce 54. If, however, they are choosing to use postponement for shortterm workers who leave soon after starting work, they may wish to choose the latest possible deferral date. 55. Generally, postponement is in respect of a single worker. However, if an employer chooses to use postponement at their staging date, they can choose to use it in respect of one worker, or groups of workers, or all their workers in employment at the staging date. 56. This can be done to stagger the introduction of the employer duties over a three-month period in order to help with the administration of a large number of new joiners to a pension scheme. To do this, an employer may postpone different groups of workers for different periods of time, up to three months after the staging date. 57. Where an employer is postponing groups of workers in this way, they will need to decide on the different deferral dates for each group. 58. On some occasions, an employer may have groups of workers starting employment on the same date and on these occasions, they can use postponement for a group of workers. Again, this could be used to help with the administration of the new duties for these workers. 59. Where an employer is using postponement in respect of a group of workers, each individual worker must be provided with a postponement notice. It is not possible for one notice to cover several workers. 1.4 Automatic re-enrolment 60. There are two types of automatic re-enrolment cyclical and immediate. With cyclical automatic re-enrolment an employer must put their eligible jobholders who are no longer in pension saving (because they chose to opt out or cease membership after the employer s staging date) back in to an automatic enrolment scheme on a three yearly cycle. With immediate automatic re-enrolment an employer must put a jobholder (whose active membership of a qualifying scheme has ceased not on their own account) back into an automatic enrolment scheme immediately certain conditions are met. 61. This guidance does not cover the rules and calculations for immediate automatic re-enrolment. Immediate re-enrolment is required when a jobholder ceases active membership of a qualifying pension scheme or the scheme ceases to be a qualifying scheme and it is not of the jobholder s own account. An automated system cannot know the reason why active membership has ceased and so it is not included here. For more information on immediate automatic re-enrolment see Detailed guidance no. 11 Automatic re-enrolment. A detailed guide to Automatic enrolment for software developers 17

18 1.0 A brief overview of the employer duties and defining the workforce 62. Whether cyclical or immediate, the process of automatic reenrolment is the same as automatic enrolment. The process is described in Detailed guidance no. 5 Automatic enrolment. Once enrolled and the jobholder becomes an active member of an automatic enrolment scheme, the jobholder has the right to opt out of the scheme. 63. Cyclical automatic re-enrolment occurs approximately every three years after an employer s staging date. Essentially cyclical reenrolment is a repeat of the process the employer carried out on their staging date (or deferral date if they used postponement to postpone all their workers at staging). On their staging date (or deferral date) the employer assessed all those working for them who they considered to be workers in order to identify which worker category they fell into. The employer was then required to automatically enrol any workers who met the criteria to be an eligible jobholder, unless they were already an active member of a qualifying scheme that the employer provided. Following automatic enrolment, the employer was required to complete a declaration of compliance (registration) with the regulator to tell us how they had discharged their duties. 64. With cyclical automatic re-enrolment the employer must assess any workers who opted out or ceased active membership of a qualifying scheme more than 12 months before a specific date the automatic re-enrolment date. Any workers who meet the criteria to be an eligible jobholder on that date must be automatically re-enrolled, unless they are already an active member of a qualifying scheme that the employer provides. Following automatic re-enrolment the employer is required to complete declaration of compliance again with the regulator (known as re-declaration ) to tell us how they have discharged their automatic re-enrolment duty. 65. For those workers who do not meet the eligible jobholder criteria, the employer has no further duties until the next cyclical automatic re-enrolment, unless the worker gives the employer an opt-in or joining notice or the employer has not yet given the worker: information about the right to opt in to an automatic enrolment scheme for jobholders with a right to opt in. If the employer previously used postponement for the worker and the general notices or the tailored notice for a jobholder, this information will have been included in the postponement notice. If the employer had previously applied the transitional period for pension schemes with defined benefits, this information will also have been included in the notice issued to the worker about the deferral of automatic enrolment. A detailed guide to Automatic enrolment for software developers 18

19 1.0 A brief overview of the employer duties and defining the workforce information about the right to join a pension scheme for entitled workers. If the employer previously used postponement for the worker and the general notices or the tailored notice for an entitled worker, this information will have been included in the postponement notice, and information about the scheme for jobholders who are active members of a qualifying scheme (if the employer previously used postponement for the worker and general notice A this information will have been included in the postponement notice). 66. If the employer has not discharged these information requirements yet for that worker they will have to keep monitoring the worker each pay reference period to identify when any outstanding information requirement is triggered. 67. However, there are some key differences between automatic reenrolment and automatic enrolment. The first is that, although both automatic re-enrolment and automatic enrolment apply to eligible jobholders, automatic re-enrolment will only apply to eligible jobholders who have already had an automatic enrolment date with that employer. Automatic enrolment dates are explained in section 2 of this guidance. 68. Another key difference is that postponement cannot be used with automatic re-enrolment. If the eligible jobholder criteria are met by a worker on the automatic re-enrolment date, automatic reenrolment must take place. The cyclical automatic re-enrolment date 69. The first step for an employer is to know their cyclical automatic reenrolment date. The employer may choose this date from any date that falls within a six month window, starting three months before the third anniversary of their staging date and ending three months after that anniversary. Examples of re-enrolment windows Employer A has a staging date of 1 April Their first reenrolment window is 1 January 2016 to 30 June Employer B has a staging date of 1 October Their first reenrolment window is 1 July 2018 to 31 December Employer C has a staging date of 1 February Their first reenrolment window is 1 November 2019 to 30 April A detailed guide to Automatic enrolment for software developers 19

20 1.0 A brief overview of the employer duties and defining the workforce 70. The next cyclical automatic re-enrolment date is a date of the employer s choosing within a six month window. This six month window starts three months before the third anniversary of the employer s last cyclical automatic re-enrolment date and ends three months after that third anniversary. 71. When choosing their cyclical automatic re-enrolment date employers should be aware of the interaction with their redeclaration duty. If an employer does not have workers who meet the criteria for cyclical automatic re-enrolment the deadline for re-declaring with us is the day before the third anniversary of the employer s last declaration. 72. Given that the employer had four months from their staging date (for an employer whose staging date was before 1 Janaury 2014) and five months from their staging date (for an employer whose staging date was after 1 January 2014) to submit their declaration of compliance, it is possible that the third anniversary of the employer s declaration may fall within the re-enrolment window (as the re-enrolment window runs for three months after the third anniversary of the staging date (see diagram below). This will not be relevant to an employer who used postponement at their staging date for the maximum three months. A detailed guide to Automatic enrolment for software developers 20

21 1.0 A brief overview of the employer duties and defining the workforce The re-enrolment window and the third anniversary of declaration/re-declaration Earliest possible re-enrolment date Re-enrolment window Latest possible re-enrolment date -3 months from before 3rd anniversary of staging date 3rd anniversary of staging date +3 months from 3rd anniversary of staging date Latest possible 3 year period from declaration +4 months* from 3rd anniversary of staging date +5 months** from 3rd anniversary of staging date The day before the third anniversary of declaration can fall on any day within this period * Employers with staging dates before 1 January 2014 ** Employers with staging dates after 1 January 2014 Any 3 year period from declaration which falls within this period will be outside the re-enrolment window A detailed guide to Automatic enrolment for software developers 21

22 1.0 A brief overview of the employer duties and defining the workforce 73. An employer who did not use postponement at their staging date for the maximum three months should identify where the third anniversary of declaration falls within the re-enrolment window. Every employer will have received written confirmation of their declaration from the regulator. An employer should keep a record of the date of declaration. In addition, an employer will be able to see the date they submitted their declaration to us on the online declaration of compliance portal available on our website. 74. Where an employer did not use postponement at their staging date for the maximum three months this deadline for re-declaration where there are no workers to re-enrol will fall part way through the re-enrolment window. If the employer chooses a cyclical automatic re-enrolment date after this deadline and then finds that they have no eligible jobholders to re-enrol they will have missed the deadline for re-declaration and be in breach of the duty. 75. In these circumstances, if an employer cannot be sure that they will have an eligible jobholder to automatically re-enrol, then to be able to comply with their re-declaration duty, the last date from which they can choose their cyclical automatic re-enrolment date is at the end of the period of three years starting from when they provided the previous declaration or re-declaration information. Who to automatically re-enrol 76. An employer must automatically re-enrol any workers: who have had an automatic enrolment date with that employer, and who are not active members of a qualifying pension scheme with that employer, and who opted out or ceased membership of a qualifying pension scheme with that employer more than 12 months before the automatic re-enrolment date, and who meet the criteria to be an eligible jobholder on the automatic re-enrolment date. A detailed guide to Automatic enrolment for software developers 22

23 1.0 A brief overview of the employer duties and defining the workforce 77. In practice, this is a worker who: a. the employer has previously automatically enrolled into an automatic enrolment scheme and who then opted out or voluntarily ceased active membership under the scheme rules more than 12 months before the cyclical automatic re-enrolment date (this includes a worker ceasing active membership of the scheme and where active membership has continued but active membership of a qualifying scheme has ceased, for example because the worker has chosen to reduce the level of pension contributions they pay as part of a flexible benefits package) or b. the employer has previously enrolled (following opt-in) into an automatic enrolment scheme, who whilst an active member met the criteria to be an eligible jobholder and who then opted out or voluntarily ceased active membership under the scheme rules more than 12 months before the cyclical automatic reenrolment date, or c. was an active member of a qualifying scheme on the employer s staging date, voluntarily ceased active membership of that scheme more than 12 months before the cyclical automatic re-enrolment date and who whilst an active member met the criteria to be an eligible jobholder, and d. who meets the criteria to be an eligible jobholder on the automatic re-enrolment date. 78. The next section provides the specification of data and calculation routines for the core functionality described in paragraph 10. Section 3 on page 242 details the specification of data and calculation routines for wider functionality which may support an employer in their end-to-end duties. A detailed guide to Automatic enrolment for software developers 23

24 2.0 Specification of core payroll-driven calculation routines 79. In this section we cover the data sources and calculation routines for the core functionality of: the assessment of eligibility for automatic enrolment and re-enrolment (age, earnings and pension membership) and other worker types the identification of a workers automatic enrolment date and the enrolment date (opt in) the deduction of pensions contributions according to pension scheme rules refunds following opt-out. 80. Section 2 is divided into six parts: 2.1: Overview 2.2: Further guidance background information on the assessment process 2.3: Tables of data sources 2.4: Specification of calculation routines 2.5: Reports capability 2.6: Record-keeping 81. The specification of the data routines starts on page Overview 82. Using the data in this section, the system will be able to calculate: whether a worker has qualifying earnings in any relevant period whether a worker is an eligible jobholder (and therefore must be automatically enrolled or re-enrolled) whether a worker is a non-eligible jobholder whether a worker is an entitled worker the date automatic enrolment must be effective from and contributions deducted the date opt in must be effective from and contributions deducted payroll-driven record-keeping requirements. A detailed guide to Automatic enrolment for software developers 24

25 83. The calculation routines described in this section make use of: automatic enrolment data page 164 worker data page 174 data derived by the payroll (or other) system page In this section we assume that an automated system will carry out an assessment each time it is run. Flags are used in this guidance to indicate where an employer may not need to take any action on the output from that assessment. 85. In addition we assume that a number of necessary conditions for compliance, which are not supported by software, are continuously met under the duties. These assumptions are: prior to becoming subject to the duties, employers have in place a pension scheme/pension schemes that meet the relevant qualifying scheme criteria or automatic enrolment scheme criteria in order to be used under the duties the employer is satisfied that its chosen scheme(s) continues to meet the relevant criteria on an ongoing basis. If this is not the case then the employer will have to automatically re-enrol affected members within specified time frames the employer has identified those on the software system who are workers the employer has identified the workers that meet the definition of working or ordinarily working in the UK under the worker s contract and it is these workers that will undergo the assessment of age and earnings in the software system. Anyone employing a worker who works, or ordinarily works, in the UK under a worker s contract will have duties under the Pensions Act 2008 the worker remains an active member of the pension scheme unless an act on the worker s part causes them to cease active membership (ie they decide to terminate membership, leave work or retire). If anything is done by the employer, pension scheme or any other third party to interrupt active membership then the employer will be obliged to automatically re-enrol the affected jobholder within specified time frames. 86. The approach in this guidance is one way of achieving the necessary function within the system. However, there may be other ways to achieve the same function. It is for developers to decide what is appropriate within their system(s). A detailed guide to Automatic enrolment for software developers 25

26 2.2 Further guidance Assessment of qualifying earnings 87. In this part we provide background information on some of the key requirements of the assessment process which underpin the data and calculation routines starting on page 164. The assessment process is described between paragraphs 91 to An employer must assess each member of their workforce to identify into which category of worker they fall. This will determine what duties the employer will have in relation to each of those workers. 89. There must be an individual assessment of these criteria for each worker. If an employer has multiple contracts with the same individual, the employer will need to determine how they apply the duties to those multiple contracts. See Detailed Guidance no. 3 Assessing the workforce. As a consequence of this determination some or all or the contracts may need to be aggregated for the assessment of a worker. 90. The criteria for each of three categories of workers for whom the employer principally has duties includes an assessment of earnings. The legislative requirement is that qualifying earnings are payable by the employer in the relevant pay reference period above certain thresholds. 91. There are three steps to making that assessment of earnings: Step A: Identify the relevant pay reference period the period of time in which earnings are being measured Step B: Identify what is payable in that period the earnings to measure in that period of time Step C: Compare what is payable with the lower level of qualifying earnings and the earnings trigger for automatic enrolment for that period the threshold for that period of time against which to measure the identified earnings. 92. From 1 November 2013 there are two definitions of a pay reference period in legislation and an employer will be able to choose which definition they wish to adopt as the basis of their assessment process for assessing earnings in step A. 93. One definition of a pay reference period is aligned to tax weeks or months and one is aligned to the period by reference to which a person is paid their regular wage or salary. A detailed guide to Automatic enrolment for software developers 26

27 94. Employers with a staging date before 1 November 2013 will be using the definition of a pay reference period aligned to the period by reference to which a person is paid their regular wage or salary. From 1 November 2013 they can choose to change to using the definition aligned to tax weeks or months at any point on or after 1 November For more information on changing the definition of a pay reference period for the purposes of the assessment of the worker see paragraphs 210 to There is nothing that prevents an employer using one definition for some workers and the other definition for other workers. 96. An employer may wish to use the definition of a pay reference period aligned to tax week or months if: they wish to incorporate the assessment of workers easily into their payroll process. This is because this definition uses the existing tax calendar in payroll they operate 4, 4, 5 week earnings period (see paragraphs 358 to 361) but have an interval between payments of a month. This is because under this definition the pay reference period will be a month whereas under the alternative it is pay reference period of four weeks, four weeks and then five weeks recurring they wish to align the pay reference period with the start of the tax year when any changes to the thresholds for qualifying earnings will take effect. This is because it will avoid a pay reference period spanning the 6 April change and the need to apply the threshold for the previous tax year and the threshold for the new tax year in one pay reference period. 97. An employer may wish to use the definition of a pay reference period aligned to the period by reference to which the worker is paid their regular wage or salary if: they had a staging date before 1 November 2013 and their assessment process is already based on this definition of pay reference period they have workers with a contractual relationship of less than 1 week, as these workers do not have a pay reference period under this definition. 98. Identifying the relevant pay reference period using the definition aligned to tax weeks or months is described in paragraphs 104 to 153. A detailed guide to Automatic enrolment for software developers 27

28 99. Identifying the relevant pay reference period using the definition aligned to the period by reference to which the worker is paid their regular wage or salary is described in paragraphs 154 to 168. Developers should note that this is unchanged by the legislative changes and there are only minor changes to the content from the last version of this guidance It is important to note that whichever definition of pay reference period an employer chooses to use, steps B and C are unchanged by the amendment to the legislation introducing the second definition. Guidance on both of these steps can be found at paragraphs 169 to 188. Identify the relevant pay reference period 101. The first step in assessing whether qualifying earnings are payable in the relevant pay reference period is to identify the relevant pay reference period. And the first step in identifying the relevant pay reference period is for the employer to identify their usual pay reference periods An employer can now choose to define the pay reference period in one of two ways: a. By reference to a tax week or month (described in paragraphs 104 to 153), or b. By reference to the period by which the worker is paid their regular wage or salary (described in paragraphs 154 to 168) An employer can choose to use one definition for some workers and the other definition for other workers therefore software solutions should allow employers to use either or both definitions. Definition of pay reference period aligned to the tax periods 104. Under this definition the length of the pay reference is: a. a period equal in length to the usual interval between payments of the person s regular wage or salary, or b. a period of one week whichever is the longer A pay reference period starts: a. where the person is paid monthly, on the first day of a tax month b. where the person is paid weekly, on the first day of a tax week A detailed guide to Automatic enrolment for software developers 28

29 c. where the person is paid at intervals of multiple weeks, on 6th April; or the first day of the tax week which commences immediately after the expiry of a pay interval period beginning on 6 April d. where the person is paid at intervals of multiple months, on 6th April; or the first day of the tax month which commences immediately after the expiry of a pay interval period beginning on 6 April. A pay interval period is defined under the legislation as a period equal in length to the usual interval between payments of the worker s regular wage or salary and each whole multiple of that period Under this definition the first action for an employer is to identify the usual pay interval between payments of regular wage or salary for each worker. This is because the length of the usual interval between payments of regular wage or salary sets the length of a pay reference period under the legislation For example, if the interval between payments of a worker s regular wage or salary is a four week period the length of a pay reference period is four weeks There are three things to note here. Firstly the length of the pay reference period is whichever is the longer of a week and the usual interval between payments of the worker s regular wage or salary. This means that if the usual interval between payments of a worker s regular wage or salary is less than a week then the length of the pay reference period for that worker will be one week. For the purposes of assessment under this definition the worker is in our view treated as if weekly paid The second thing to note is that the length of the pay reference period is set by the usual intervals between the payments of the worker s regular wage or salary. This means where an employer, say for administrative reasons, has a different interval for some payments this will not affect the length of the pay reference period for that worker. A detailed guide to Automatic enrolment for software developers 29

30 110. For example, an employer pays their worker on the last calendar day of each month. For Christmas they close down and so bring forward their pay day to 18 December. The interval between payments from November to December in this case is only three weeks whilst the interval between payments from December to January is five weeks. However, as for the remainder of the year the interval between payments for the worker of their regular wage or salary is of a month then the usual interval between payments is one month even in December and January where the length of the interval between payments is different because of the administrative arrangement Similarly when an employer agrees to pay holiday pay in advance (whether this is an administrative or contractual arrangement) does not affect the usual interval between payments of regular wage or salary Sometimes the usual interval between payments of regular wage or salary appears to change from payment to payment with no usual interval but can, nonetheless, be treated as having a usual interval. For example, a paid monthly worker who is paid on the last working day of the month will sometimes have a pay interval of 28 days, sometimes the interval will be 30 days or 31 days and so on. In this case, in our view the interval between payments is set to be one month and the variations are just due to the variation of a calendar day falling at the weekend or on a bank holiday. Therefore, the usual interval between the payments of the worker s regular wage or salary can be considered to be monthly The final thing to note is that if there is no usual interval between the payments of regular wage or salary then in our view the pay reference period defaults to being one week in length This is a relevant consideration for employers with workers on zero hours contracts or equivalents who contractually are only paid when they do work. If there is no usual interval between the payments of the worker s regular wage or salary then the pay reference period will be a week However there may be circumstances where an employer with such workers may be able to consider that there is a usual interval between payments of wage or salary For example, an employer, who operates a weekly payroll, recruits a worker on an hourly wage. The employer cannot know in advance how many hours the worker will work each week but they have an expectation that it will be at least one shift a week. The employer can consider that the usual interval between payments of regular salary or wage will be weekly and therefore the length of the pay reference periods is one week. A detailed guide to Automatic enrolment for software developers 30

31 117. This expectation is not invalidated if it turns out that there are odd weeks where no work is done and therefore no payments are made. In our view occasional periods where there is no work and therefore no payment can be discounted when identifying the usual interval between payments, just as variation of a day or two because of weekends or bank holidays can be discounted in paragraph 112. The start dates of the pay reference period 118. Once the employer has determined the length of the pay reference period they will know which pay reference period calendar to use. The start dates of the pay reference period vary depending upon the length of the pay reference period. The length of the pay reference period is determined by the usual interval between payments of regular wage or salary or is a week. We describe the start dates of pay references for the common intervals between payments of: one week two weeks (fortnightly) four weeks (four-weekly) one month three months (quarterly) six months (bi-annual) 12 months (annual) Where the usual interval between payments is not one of these the start dates of the pay reference period will have to be derived. The pay reference period dates for pay reference period of a week or a multiple of weeks are described below. Pay reference period dates for pay reference periods of a month in length or a multiple of months are described at paragraphs 133 to 143. Pay reference periods of a week in length or a multiple of weeks 120. Where the worker is paid weekly, a pay reference period starts on the first day of a tax week. Some workers with a pay reference period of a week in length will not be paid weekly for example workers with the usual interval between payments of regular wage or salary of less than a week. Such workers are, in our view, treated as being paid weekly for the purposes of this definition (see paragraph 108 above). A detailed guide to Automatic enrolment for software developers 31

32 121. Where the length of the pay reference is a multiple of weeks, for example, two weeks (fortnightly) the pay reference period starts on 6 April each year and the first day of the tax week which commences immediately after the expiry of a pay interval period beginning on 6 April A pay interval period is a period equal in length to the usual interval between payments of the worker s regular wage or salary and each whole multiple (ie, 2, 3, 4, 5, 6 etc) of a two week period. So, in the example of a pay reference of two weeks duration the first pay reference period starts on 6 April and lasts for the first pay interval period of two weeks ending on 19 April. The first day of the tax week after 19 April is 20 April (the start of tax week 3) The next pay reference period starts on the first day of the tax week after the expiry of a pay interval period which starts on 6 April and lasts for the next whole multiple of two weeks. The next whole multiple of a two week period is a four week period. A four week period that starts on 6 April ends on 3 May. The first day of a tax week that starts after 3 May is 4 May (the start of tax week 5) In this way the pay reference period calendar for pay reference periods which are a week in length or a multiple of a week can be derived. The resulting calendars match the tax week calendar or existing practice for multiple of tax weeks. The principles above in deriving the calendar will be relevant if the multiple of weeks is not one of the common intervals of weekly, fortnightly or four-weekly The tables below detail the start and end date for the pay reference periods in a tax year for pay reference periods of one week, two weeks (fortnightly), and four weeks (four-weekly). A detailed guide to Automatic enrolment for software developers 32

33 Table 2 Weekly pay reference period calendar Tax week Non-leap year PRP Leap year PRP 1 6 Apr to 12 Apr 6 Apr to 12 Apr 2 13 Apr to 19 Apr 13 Apr to 19 Apr 3 20 Apr to 26 Apr 20 Apr to 26 Apr 4 27 Apr to 3 May 27 Apr to 3 May 5 4 May to 10 May 4 May to 10 May 6 11 May to 17 May 11 May to 17 May 7 18 May to 24 May 18 May to 24 May 8 25 May to 31 May 25 May to 31 May 9 1 Jun to 7 Jun 1 Jun to 7 Jun 10 8 Jun to 14 Jun 8 Jun to 14 Jun Jun to 21 Jun 15 Jun to 21 Jun Jun to 28 Jun 22 Jun to 28 Jun Jun to 5 Jul 29 Jun to 5 Jul 14 6 Jul to 12 Jul 6 Jul to 12 Jul Jul to 19 Jul 13 Jul to 19 Jul Jul to 26 Jul 20 Jul to 26 Jul Jul to 2 Aug 27 Jul to 2 Aug 18 3 Aug to 9 Aug 3 Aug to 9 Aug Aug to 16 Aug 10 Aug to 16 Aug Aug to 23 Aug 17 Aug to 23 Aug Aug to 30 Aug 24 Aug to 30 Aug Aug to 6 Sep 31 Aug to 6 Sep 23 7 Sep to 13 Sep 7 Sep to 13 Sep continued... A detailed guide to Automatic enrolment for software developers 33

34 24 14 Sep to 20 Sep 14 Sep to 20 Sep Sep to 27 Sep 21 Sep to 27 Sep Sep to 4 Oct 28 Sep to 4 Oct 27 5 Oct to 11 Oct 5 Oct to 11 Oct Oct to 18 Oct 12 Oct to 18 Oct Oct to 25 Oct 19 Oct to 25 Oct Oct to 1 Nov 26 Oct to 1 Nov 31 2 Nov to 8 Nov 2 Nov to 8 Nov 32 9 Nov to 15 Nov 9 Nov to 15 Nov Nov to 22 Nov 16 Nov to 22 Nov Nov to 29 Nov 23 Nov to 29 Nov Nov to 6 Dec 30 Nov to 6 Dec 36 7 Dec to 13 Dec 7 Dec to 13 Dec Dec to 20 Dec 14 Dec to 20 Dec Dec to 27 Dec 21 Dec to 27 Dec Dec to 3 Jan 28 Dec to 3 Jan 40 4 Jan to 10 Jan 4 Jan to 10 Jan Jan to 17 Jan 11 Jan to 17 Jan Jan to 24 Jan 18 Jan to 24 Jan Jan to 31 Jan 25 Jan to 31 Jan 44 1 Feb to 7 Feb 1 Feb to 7 Feb 45 8 Feb to 14 Feb 8 Feb to 14 Feb Feb to 21 Feb 15 Feb to 21 Feb Feb to 28 Feb 22 Feb to 28 Feb 48 1 Mar to 7 Mar 29 Feb to 6 Mar continued... A detailed guide to Automatic enrolment for software developers 34

35 49 8 Mar to 14 Mar 7 Mar to 13 Mar Mar to 21 Mar 14 Mar to 20 Mar Mar to 28 Mar 21 Mar to 27 Mar Mar to 4 Apr 28 Mar to 3 Apr 53 in 1st instance 5 Apr to 5 Apr or 5 Apr to 11 Apr 4 Apr to 5 Apr or 4 Apr to 10 Apr Table 3 Fortnightly pay reference period calendar Tax weeks Non-leap year PRP Leap year PRP 1 & Apr to 19 Apr 6 Apr to 19 Apr 3 & 4 20 Apr to 3 May 20 Apr to 3 May 5 & 6 4 May to 17 May 4 May to 17 May 7 & 8 18 May to 31 May 18 May to 31 May 9 & 10 1 Jun to 14 Jun 1 Jun to 14 Jun 11 & Jun to 28 Jun 15 Jun to 28 Jun 13 & Jun to 12 Jul 29 Jun to 12 Jul 15 & Jul to 26 Jul 13 Jul to 26 Jul 17 & Jul to 9 Aug 27 Jul to 9 Aug 19 & Aug to 23 Aug 10 Aug to 23 Aug 21 & Aug to 6 Sep 24 Aug to 6 Sep 23 & 24 7 Sep to 20 Sep 7 Sep to 20 Sep 25 & Sep to 4 Oct 21 Sep to 4 Oct 27 & 28 5 Oct to 18 Oct 5 Oct to 18 Oct 29 & Oct to 1 Nov 19 Oct to 1 Nov 31 & 32 2 Nov to 15 Nov 2 Nov to 15 Nov continued... 1 We understand that normal payroll practice would be for this period to show as week 2. However, for automatic enrolment the first day of a pay reference period is a key date and that is why it is shown here as tax week 1 and 2, and the equivalent in the remainder of the table. A detailed guide to Automatic enrolment for software developers 35

36 33 & Nov to 29 Nov 16 Nov to 29 Nov 35 & Nov to 13 Dec 30 Nov to 13 Dec 37 & Dec to 27 Dec 14 Dec to 27 Dec 39 & Dec to 10 Jan 28 Dec to 10 Jan 41 & Jan to 24 Jan 11 Jan to 24 Jan 43 & Jan to 7 Feb 25 Jan to 7 Feb 45 &46 8 Feb to 21 Feb 8 Feb to 21 Feb 47 & Feb to 7 Mar 22 Feb to 6 Mar 49 & 50 8 Mar to 21 Mar 7 Mar to 20 Mar 51 & Mar to 4 Apr 21 Mar to 3 Apr 53 in 1st instance 5 Apr to 5 Apr or 5 Apr to 18 Apr 4 Apr to 5 Apr or 4 Apr to 17 Apr Table 4 Four-weekly pay reference period calendar Tax weeks Non-leap year PRP Leap year PRP Apr to 3 May 6 Apr to 3 May May to 31 May 4 May to 31 May Jun to 28 Jun 1 Jun to 28 Jun Jun to 26 Jul 29 Jun to 26 Jul Jul to 23 Aug 27 Jul to 23 Aug Aug to 20 Sep 24 Aug to 20 Sep Sep to 18 Oct 21 Sep to 18 Oct Oct to 15 Nov 19 Oct to 15 Nov Nov to 13 Dec 16 Nov to 13 Dec Dec to 10 Jan 14 Dec to 10 Jan Jan to 7 Feb 11 Jan to 7 Feb continued... 2 We understand that normal payroll practice would be for this period to show as week 2. However, for automatic enrolment the first day of a pay reference period is a key date and that is why it is shown here as tax week 1 and 2, and the equivalent in the remainder of the table. A detailed guide to Automatic enrolment for software developers 36

37 Feb to 7 Mar 8 Feb to 6 Mar Mar to 4 Apr 7 Mar to 3 Apr 5 Apr to 5 Apr or 5 Apr to 2 May 4 Apr to 5 Apr or 4 Apr to 1 May 126. The first pay reference period of each tax year starts on 6 April and resets the calendar for each tax year This means that there appears to be overlapping pay reference periods at the change in the tax year. In most circumstances however the last pay reference period is ended early on 5 April to avoid this overlap. Ending the pay reference period on 5 April depends upon when qualifying earnings are payable. As we do not explain payable qualifying earnings until step B, more information about the pay reference periods at the tax year change can be found at paragraphs 189 to If the usual interval between payments of regular wage or salary is not fortnightly or four-weekly but is another multiple of weeks (eg five-weeks) the length of the pay reference period will be equal to that multiple of weeks. Where an employer has a pay reference period of a length equal to such a multiple of weeks they should apply the same method as described in paragraphs 36 to 38 to derive the pay reference period calendar For example, if the usual interval between payments of regular wage or salary is five weeks, then a pay interval period is, in this case, a period equal in length to five weeks and each whole multiple of a five week period. The first pay reference period starts on 6 April and lasts for the first pay interval period of five weeks ending on 10 May. The first day of the tax week after 10 May is 11 May (the start of tax week 6) The next pay reference period starts on the first day of the tax week after the expiry of a pay interval period which starts on 6 April and lasts for the next whole multiple (ie, two) of five weeks. The next whole multiple of a five week period is a 10 week period. A 10 week period that starts on 6 April ends on 14 June. The first day of a tax week that starts after 14 June is 15 June (the start of tax week 11) These steps are repeated until the end of the tax year to give the starts dates of each pay reference period in the year (see example calendar below). A detailed guide to Automatic enrolment for software developers 37

38 Example of five-weekly pay reference period calendar Tax weeks Non-leap year PRP Leap year PRP Apr to 10 May 6 Apr to 10 May May to 14 Jun 11 May to 14 Jun Jun to 19 Jul 15 Jun to 19 Jul Jul to 23 Aug 20 Jul to 23 Aug Aug to 27 Sep 24 Aug to 27 Sep Sep to 1 Nov 28 Sep to 1 Nov Nov to 6 Dec 2 Nov to 6 Dec Dec to 10 Jan 7 Dec to 10 Jan Jan to 14 Feb 11 Jan to 14 Feb Feb to 21 Mar 15 Feb to 20 Mar 22 March to 5 April or 22 Mar to 25 Apr 21 Mar to 24 Apr 132. As with the weekly, fortnightly and four-weekly pay reference periods, the first pay reference period of each tax year starts on 6 April and resets the calendar for each tax year. In this case however it is more likely that there will be overlapping pay reference periods for the purposes of assessment although in some circumstances the pay reference period will be ended on 5 April. Again paragraphs 189 to 209 have more detail. Pay reference periods of a month in length or a multiple of months 133. Where the worker is paid monthly, the pay reference period starts on the first day of the tax month. Where the length of the pay reference period is a multiple of a month, for example three months, the pay reference period starts on 6 April each year and the first day of the tax month which commences immediately after the expiry of a pay interval period beginning on 6 April. A detailed guide to Automatic enrolment for software developers 38

39 134. A pay interval period is a period equal in length to the usual interval between payments of the worker s regular wage or salary and each whole multiple (ie, 2, 3, 4) of that period. So, in the example of a pay reference of three months duration the first pay reference period starts on 6 April and lasts for the first pay interval period of three months ending on 5 July. The first day of the tax month after 5 July is 6 July (the start of tax month 4) The next pay reference period starts on the first day of the tax month after the expiry of a pay interval period which starts on 6 April and lasts the next multiple of three months. The next whole multiple (ie, two) of a three month period is a six month period. A six month period that starts on 6 April ends on 5 October. The first day of a tax month that starts after 5 October is 6 October (the start of tax month 7) In this way the pay reference period calendar for a pay reference period of a month or a multiple of a month can be derived. The resulting calendars match the tax month calendar or existing practice for multiples of tax months. The principles above in deriving the calendar will be relevant if the multiple of months is not one of the common intervals of monthly, quarterly, bi-annual or annual The first pay reference period of each tax year starts on 6 April and resets the calendar for each tax year The tables below detail the start and end date for the pay reference periods in a tax year for pay reference periods of a month, three months (quarterly), six months (bi-annual) and 12 months. A detailed guide to Automatic enrolment for software developers 39

40 Table 5 Monthly pay reference period calendar Table 6 Quarterly pay reference period calendar Tax month PRP Tax month PRP 1 6 Apr to 5 May 2 6 May to 5 Jun 3 6 Jun to 5 Jul 4 6 Jul to 5 Aug Apr to 5 Jul Jul to 5 Oct Oct to 5 Jan Jan to 5 Apr 5 6 Aug to 5 Sep 6 6 Sep to 5 Oct 7 6 Oct to 5 Nov 8 6 Nov to 5 Dec 9 6 Dec to 5 Jan 10 6 Jan to 5 Feb 11 6 Feb to 5 Mar 12 5 Mar to 5 Apr Table 7 Bi-annual pay reference period calendar Table 8 Annual pay reference period calendar Tax month PRP Tax month PRP Apr to 5 Oct Apr to 5 Apr Oct to 5 Apr A detailed guide to Automatic enrolment for software developers 40

41 139. If the usual interval between payments of regular wage or salary is not one of these but is another multiple of months (eg bi-monthly) the length of the pay reference period will be equal to that multiple of months. Where an employer has a pay reference period of a length equal to such a multiple of months they should apply the same method as described in paragraphs 50 to 53 to derive the pay reference period calendar For example, if the usual interval between payments of regular wage or salary is two months, then a pay interval period in this case is a period equal in length to two months and each whole multiple (ie, 2, 3, 4, 5, and 6) of a two month period. In this case the first pay reference period starts on 6 April and lasts for the first pay interval period of two months ending on 5 June. The first day of the tax month after 5 June is 6 June (the start of tax month week 3) The next pay reference period starts on the first day of the tax week after the expiry of a pay interval period starting on 6 April and lasting the next multiple of two months. The next whole multiple (ie, two) of a two month period is a four month period. A four month period that starts on 6 April ends on 5 August. The first day of a tax month that starts after 5 August is 6 August (the start of tax month 5) These steps are repeated until the end of the tax year to give the start dates of each pay reference period in the year (see example calendar below): Example of a bi-monthly pay reference period calendar Tax month PRP Apr to 5 June June to 5 Aug Aug to 5 Oct Oct to 5 Dec Dec to 5 Feb Feb to 5 Apr 143. The first pay reference period of each tax year starts on 6 April and resets the calendar for each tax year. A detailed guide to Automatic enrolment for software developers 41

42 The relevant pay reference period 144. We ve discussed in paragraphs 104 to 143 the usual pay reference period where the employer is using the definition of a pay reference period aligned to tax weeks and months. But the legislative requirement means that the employer must measure earnings in a specific pay reference period the relevant pay reference period. We need to go back a step in explaining what the relevant pay reference period is The legislation requires that automatic enrolment is with effect from the automatic enrolment date. The automatic enrolment date is the first date that the criteria to be an eligible jobholder are met or if the employer is using postponement, the deferral date if on that date the criteria to be an eligible jobholder are met The legislation also requires that information about the right to join a pension scheme or to opt in to an automatic enrolment pension scheme is given by the end of the period of six weeks from the date the right first applies An employer therefore has to identify the first time a worker meets the criteria to be an eligible jobholder, non-eligible jobholder or entitled worker because they have duties from this date and the deadline for completion of those duties starts from this date It is not practical for an employer to be looking every day to see the first occasion that earnings have reached a level for a certain category to be met. So the legislation covers a series of dates/ events which trigger the employer to look at their worker to see what criteria are met. We group these dates together and call them the assessment date in our guidance for employers The assessment dates include: a. the employer s staging date b. the worker s first day of employment c. the worker s 16th birthday d. the worker s 22nd birthday e. the deferral date (where the employer has chosen to use postponement) f. the day after the transitional period ends (where the employer has chosen to use the transitional period for defined benefit and hybrid pension schemes with defined benefits) g. the day the employer receives an opt in or joining notice from a worker h. the first day of a pay reference period. A detailed guide to Automatic enrolment for software developers 42

43 150. This list includes the first day of a pay reference period because if, on an assessment date, the criteria to be an eligible jobholder are not met, the employer must look again on day one of the following pay reference period (as they need to identify the first point the criteria are met) and so on The relevant pay reference period is the pay reference period in which the assessment date falls. Relevant pay reference periods (where the definition of a pay reference period is aligned to tax weeks or months) Example of weekly pay interval pay day on Fridays. Pay reference period is therefore weekly, starting on the first day of the tax week. 1/10 staging date 1/10 staging date 24/10 new starter 24/10 new starter Sat 28/9 Sat 28/9 Sat 5/10 Sat 5/10 Staging date relevant PRP 28/9-4/10 (tax week 26) Staging date relevant PRP 28/9-4/10 (tax week 26) Sat 12/10 Sat 12/10 Sat 19/10 Sat 19/10 Sat 26/10 Sat 26/10 New starter relevant PRP 19/10-25/10 (tax week 29) New starter relevant PRP 19/10-25/10 (tax week 29) Example of monthly pay interval pay day on 25th day of the month. Pay reference period 1/10 is therefore monthly, starting on the 6th of each month. staging date 1/10 staging date 14/11 new starter 14/11 new starter 6/9 6/9 Sept 2013 Tax month 6 Sept 2013 Tax month 6 Oct 2013 Nov /10 Tax month 7 6/11 Tax month 8 6/12 Oct 2013 Nov /10 Tax month 7 6/11 Tax month 8 6/12 Staging date relevant PRP 6/9-5/10 (tax month 6) Staging date relevant PRP 6/9-5/10 (tax month 6) New starter relevant PRP 6/11-5/12 (tax month 8) New starter relevant PRP 6/11-5/12 (tax month 8) A detailed guide to Automatic enrolment for software developers 43

44 152. Having identified the relevant pay reference period the next step in the assessment process is to identify the qualifying earnings payable in the relevant pay reference period. This is described at paragraph We now go on to look at the alternative definition of pay reference period which an employer may choose to use for some or all of their workers. Definition of pay reference period aligned to the period by reference to which the worker is paid their regular wage or salary 154. Under this definition, the pay reference period is defined in the legislation as: a. in the case of a person who is paid their regular wage or salary by reference to a period of a week, the period of one week b. in the case of a person who is paid their regular wage or salary by reference to a period longer than a week, that period The first step in understanding what the relevant pay reference period is for a worker is to identify what the pay reference period is for that worker. The usual pay reference period for a worker is the period of time by reference to which the employer pays the worker their regular wage or salary. Under this definition, the pay reference period is not the interval between the dates the worker actually receives their pay ie it is not the pay frequency although sometimes the two will coincide. For example a salaried worker who is paid by reference to the work done in a calendar month will have a monthly pay reference period and will also have a monthly pay frequency As it is not the pay frequency it is separate to PAYE and NIC so it is not the tax week or tax month. (If the employer wants to align to tax weeks or months they should use the alternative definition (see paragraphs 104 to 153).) 157. When using this definition of a pay reference period, understanding by reference to what period of time an employer is paying a worker is key to identifying the pay reference periods For example, if an employer collates hours worked on a four-weekly basis and pays the worker s wage in respect of those hours worked, their pay reference period will be four-weekly. This is the period of time by reference to which they pay their workers. Even if the worker misses submitting their hours in a four-weekly period until the next period this does not alter the usual period of time over which the employer collates hours. The employer s administrative process is still to collate on a four-weekly basis and the employer is identifying the general period of time by reference to which they pay the worker. A detailed guide to Automatic enrolment for software developers 44

45 159. Equally it does not matter if the employer pays in arrears. It does not matter if the period of time over which they collate overtime is different. It does not matter if the pay date is the same date each month. The employer is identifying the general period of time by reference to which they pay the worker s salary or wage. Example 1 ABC Ltd pays weekly in arrears. They collate hours worked from a Tuesday to a Monday. Jo worked 35 hours in the week from Tuesday 24 April to Monday 30 April. Her wages for this period are 350. Pay date is Friday 4 May. Remember the employer is considering the general period of time by reference to which they pay. They do not consider the pay date for working out the general time by reference to which they pay. They only consider column 1 the period over which hours worked are collated. 1. Period over which hours worked are collated 2. Pay date 24/4 to 30/4 4/5 1/5 to 7/5 11/5 8/5 to 14/5 18/5 From this ABC Ltd will identify that the pay reference period for Jo is weekly, that starts on a Tuesday and ends on a Monday The principle is the same for salaried workers although the employer is not collating hours. The employer needs to consider by reference to what period of time they pay the worker s salary For example, Worker A receives a fixed basic salary and is paid monthly. This is paid on the last working day of the calendar month. This payment relates to work done during the period from the first of the month to the end of the month. The pay reference period for March runs from 1 March to 31 March Worker B receives a fixed basic salary and is paid monthly. This is paid on the 23rd of each month. The payment relates to work done between 24th and the 23rd day of the following month. Worker B s March pay reference period runs from 24 February to 23 March. A detailed guide to Automatic enrolment for software developers 45

46 163. The definition of worker includes any individual who has a contract to perform work or services personally (ie they cannot send a substitute or sub-contract the work) and is not undertaking the work as part of their own business Such personal service workers may not be paid by an employer through payroll but rather they invoice an employer for their services. When identifying the pay reference period for this type of worker, the same principle applies for the employer. They need to identify the period by reference to which they pay the worker. The employer may collate the invoices they receive over defined periods of time eg on a weekly basis in which case this is the period of time by reference to which they pay the worker. Or they may agree to pay a fixed fee on completion of the contract in which case the duration of the contract is the period of time by reference to which they pay But the legislative requirement means that the employer must measure earnings in a specific pay reference period the relevant pay reference period As explained in paragraphs 145 to 147, an employer has to identify the first time a worker meets the criteria to be an eligible jobholder, non-eligible jobholder or entitled worker because they have duties from this date and the deadline for completion of those duties starts from this date It is not practical for an employer to be looking every day to see the first occasion that earnings have reached a level for a certain category to be met. So the legislation covers a series of dates/ events which trigger the employer to look at their worker to see what criteria are met. These assessment dates are described at paragraph The relevant pay reference period is the pay reference period in which the assessment date falls. A detailed guide to Automatic enrolment for software developers 46

47 Relevant pay reference periods (where the definition is aligned with the period by reference to which the worker is paid) Example of a weekly PRP Saturday to Friday 1/10 staging date 1/10 staging date 24/10 new starter 24/10 new starter Fri 27/9 Fri 27/9 Fri 4/10 Fri 4/10 Staging date relevant PRP 27/9-3/10 Staging date relevant PRP 27/9-3/10 Fri 11/10 Fri 11/10 Fri 18/10 Fri 18/10 Fri 25/10 Fri 25/10 New starter relevant PRP 18/10-24/10 New starter relevant PRP 18/10-24/10 Example of a monthly PRP first day of the calendar month to the last day 1/10 staging date 1/10 staging date 14/11 new starter 14/11 new starter 1/10 1/10 Oct 2013 Nov /11 1/12 Oct 2013 Nov /11 1/12 Staging date relevant PRP 1/10-31/10 Staging date relevant PRP 1/10-31/10 New starter relevant PRP 1/11-30/11 New starter relevant PRP 1/11-30/11 A detailed guide to Automatic enrolment for software developers 47

48 Identify what is payable in that period 169. Having identified the relevant pay reference period (using whichever definition of pay reference period the employer has chosen to use) the next step for the employer is to identify whether qualifying earnings are payable in that period, or whether qualifying earnings are payable above the earnings trigger for automatic enrolment in that period The employer is considering whether qualifying earnings are payable above the lower level of qualifying earnings or the earnings trigger for automatic enrolment that apply to that relevant pay reference period. We split this into two steps below, first identifying what is payable and then in step C whether what is payable is above the applicable thresholds The identification of the period over which earnings are being measured is a separate and distinct consideration from identifying whether qualifying earnings are payable in the relevant pay reference period once the employer has identified it The key word in identifying qualifying earnings are payable in the relevant pay reference period is payable. Payable means due to be paid so it includes qualifying earnings actually paid in the pay reference period as well as what is due to paid or ought to have been paid in the pay reference period Payable does not mean earned. This is important to remember where a worker is being paid in arrears. When a worker is paid in arrears the employer considers what is due to be paid in the relevant pay reference period not what is due to be earned during that period The employer must consider what is payable in the whole pay reference period, irrespective of whether the assessment date (such as the worker s 22nd birthday or the first day of employment) falls part way through a pay reference period. A detailed guide to Automatic enrolment for software developers 48

49 Examples 2a and 2b use the same facts. In example 2a the definition of a pay reference period is aligned to the period by reference to which the worker is paid their regular wage or salary. In example 2b the definition of a pay reference period is aligned to tax weeks or months. Example 2a Where pay reference period definition is aligned to the period by reference to which the worker is paid their regular wage or salary Jasper is paid monthly on the 15th of the month, in respect of work done between the first and the last day of the calendar month. He is paid in arrears and payroll closes on the third of the month. His basic monthly salary is 750. On 30 July he was awarded a bonus of 100. On 5 August he worked some hours overtime for which he earned 50. He turns 22 on 24 August. His employer knows that this is a date on which he must assess his worker. The first step for the employer is to identify what the pay reference periods are for Jasper. His employer has chosen to use the definition of a pay reference period aligned to the period by reference to which Jasper is paid his regular wage or salary. The employer identifies that Jasper s pay reference periods are calendar monthly, starting on the first day of the calendar month and ending on the last calendar day. payroll cut off payroll cut off payroll cut off July 2014 Aug 2014 Sept 2014 pay date The next step is to identify the relevant pay reference period. The assessment date is his 22nd birthday on 24 August so the relevant payroll pay reference period payroll is the one that payroll runs 1 August to 31 August. cut off cut off cut off continued... July 2014 Aug Sept 2014A detailed guide to 2014 Automatic enrolment for software developers 49 pay date Relevant PRP 1-31 August

50 pay date 2.0 Specification of core payroll-driven calculation routines payroll cut off payroll cut off payroll cut off July 2014 Aug 2014 Sept 2014 pay date 22nd birthday 24/8 Relevant PRP 1-31 August Next the employer must identify whether qualifying earnings are payable in the relevant pay reference period. The qualifying earnings payable in the period 1 August to 31 August are those that fall to be paid on 15 August. For the assessment of what is payable in this period it does not matter that this is in respect of work done between 1 July and 31 July. The employer is only considering what is payable in the period 1 August to 31 August. Jasper s qualifying earnings payable in the relevant pay reference period are 850 ( 750 (salary) (bonus)). The overtime worked on 5 August is not payable until the next pay date as Jasper is paid in arrears. Example 2b Where pay reference period definition is aligned to tax weeks and months Jasper is paid monthly, on the 15th of the month in respect of work done between the first and the last day of the calendar month. He is paid in arrears and payroll closes on the third of the month. His basic monthly salary is 750. On 30 July he was awarded a bonus of 100. On 5 August he worked some hours overtime for which he earned 50. He turns 22 on 24 August. His employer knows that this is a date on which he must assess his worker. continued... A detailed guide to Automatic enrolment for software developers 50

51 The first step for the employer is to identify what the pay reference periods are for Jasper. His employer has chosen to use the definition of a pay reference period aligned to tax weeks or months. The employer identified that the usual interval between payments of Jasper s regular wage or salary was monthly and therefore that Jasper s pay reference periods are monthly starting on the sixth day of the calendar month and ending on the fifth day of the next month. payroll cut off payroll cut off payroll cut off 6 payroll cut off 6 payroll cut off 6 payroll cut off 6 July Aug Sept 2014 July pay date 2014 Aug 2014 Sept 2014 The next step is to identify the relevant pay reference period. The assessment pay date date is his 22nd birthday on 24 August so the relevant pay reference payroll period is the one payroll that runs 6 August payroll to 5 September. cut off cut off cut off 6 payroll cut off 6 payroll cut off 6 payroll cut off 6 July Aug Sept 2014 July 2014 pay date 22nd birthday 24/8 pay date 22nd birthday 24/8 Relevant PRP Aug 6 Aug - 5 Sept 2014 Relevant PRP 6 Aug - 5 Sept Sept 2014 continued... A detailed guide to Automatic enrolment for software developers 51

52 Next the employer must identify whether qualifying earnings are payable in the relevant pay reference period. The qualifying earnings payable in the period 6 August to 5 September are those that fall to be paid on 15 August. For the assessment of what is payable in this period it does not matter that this is in respect of work done between 1 July and 31 July. The employer is only considering what is payable in the period 6 August to 5 September. Jasper s qualifying earnings payable in the relevant pay reference period are 850 ( 750 (salary) (bonus)). The overtime worked on 5 August is not payable until the next pay date as Jasper is paid in arrears As the employer must consider what is payable in the whole pay reference period, then where they have chosen to use the definition of a pay reference period aligned to tax weeks and months for workers with a usual interval between payments of regular wage or salary of less than a week, all payments of qualifying earnings that are due to be paid in the weekly pay reference period must be added together. Compare what is payable with the lower level of qualifying earnings and the earnings trigger for automatic enrolment 176. The final step in the assessment of earnings is to compare the qualifying earnings payable in the relevant pay reference period against the lower threshold of qualifying earnings and/or the earnings trigger for automatic enrolment applicable to that relevant pay reference period The DWP has published the legislative thresholds for the tax year. The thresholds for a relevant pay reference period of one week, two weeks, four weeks, one month, four months, six months and an annual pay reference period are set out in the legislation. An employer can use Table 9 where we have reproduced the legislative thresholds to look up the appropriate value. The thresholds are also set out (including the upper threshold of qualifying earnings) as part of the automatic enrolment data sources A2-A4. A detailed guide to Automatic enrolment for software developers 52

53 Table 9 The lower level of qualifying earnings and the earnings trigger for automatic enrolment for tax year PRP Lower level of qualifying earnings Earnings trigger for automatic enrolment One week Fortnight Four weeks One month One quarter 1, , Bi-annual 2, , Annual 5, , If the relevant pay reference period is a period that is not on the list in Table 9, an employer will need to derive the appropriate threshold amount. For variations of a weekly period, an employer should multiply the number of weeks in the relevant pay reference period by the appropriate weekly threshold in Table 9. For example, if the relevant pay reference period is a five-weekly period, the earnings trigger for automatic enrolment will be 960 (5 x 192) For variations of a monthly period, an employer should multiply the number of months in the relevant pay reference period by the appropriate monthly threshold in Table 9. For example, if the relevant pay reference period is a two-monthly period, the earnings trigger for automatic enrolment will be 1,666 (2 x 833) If the earnings identified at step B are above the earnings trigger for the relevant pay reference period, and the worker is aged between 22 and state pension age and is working or ordinarily works in the UK, then the worker is an eligible jobholder If the earnings identified at step B are above the earnings trigger for the relevant pay reference period but the worker is aged between 16 and 21 or state pension age and 74 and is working or ordinarily works in the UK, then the worker is a non-eligible jobholder If the earnings identified at step B are between the lower level of qualifying earnings and the earnings trigger for the relevant pay reference period, and the worker is aged between 16 and 74 and is working or ordinarily works in the UK, then the worker is a noneligible jobholder. A detailed guide to Automatic enrolment for software developers 53

54 183. If the earnings identified at step B are less than the lower level of qualifying earnings for the relevant pay reference period, and the worker is aged between 16 and 74 and is working or ordinarily works in the UK, then the worker is an entitled worker If the assessment of the worker identifies that the worker is an eligible jobholder, then unless the eligible jobholder is already an active member of a qualifying scheme with that employer, the employer: can choose to either automatically enrol the eligible jobholder or apply a postponement period of up to three months, if the assessment date is not the deferral date, or must automatically enrol the eligible jobholder if the assessment date is the deferral date If the employer is automatically enrolling the eligible jobholder, they must make arrangements so that the eligible jobholder becomes an active member of an automatic enrolment scheme with effect from their automatic enrolment date The employer must therefore identify the eligible jobholder s automatic enrolment date. This is the start date for active membership, the start date of the six week joining window during which the employer must complete the automatic enrolment process and for any pay on or after this date the employer is required under the legislation to deduct contributions The automatic enrolment date is: the first day that the criteria to be an eligible jobholder are met, or if an employer has chosen to use postponement, the deferral date, where the assessment of the worker identified that they were an eligible jobholder on that date In practice, the automatic enrolment date will be the same date as the assessment date, if the assessment of the worker on that date identifies that the worker is an eligible jobholder. A detailed guide to Automatic enrolment for software developers 54

55 Examples 3a and 3b use the same facts. In example 3a the definition of a pay reference period is aligned to the period by reference to which the worker is paid their regular wage or salary. In example 3b the definition of a pay reference period is payroll payroll payroll aligned cut off to tax weeks or months. cut off cut off Example 3a Where pay reference period definition is aligned to the period by reference to which the worker is paid their regular wage or salary July Aug Sept Consider Jasper again. Jasper s qualifying earnings payable in the relevant pay reference period are 850 ( 750 salary bonus). pay The daterelevant pay reference period is the one in which the assessment date falls. In this case the assessment date is his 22nd birthday ie 24 August. payroll cut off payroll cut off payroll cut off July 2014 Aug 2014 Sept 2014 pay date 22nd birthday 24/8 Relevant PRP 1-31 August Jasper is an eligible jobholder on the assessment date of 24 August and his automatic enrolment date is 24 August. Example 3b Where pay reference period definition is aligned to tax weeks and months Consider Jasper again. Jasper s qualifying earnings payable in the relevant pay reference period are 850 ( 750 salary bonus). The relevant pay reference period is the one in which the assessment date falls. In this case the assessment date is his 22nd birthday ie 24 August. continued... A detailed guide to Automatic enrolment for software developers 55

56 Specification pay date of core payroll-driven calculation routines payroll cut off payroll cut off payroll cut off pay date July nd birthday 24/8 Aug 2014 Relevant PRP 6 Aug - 5 Sept Sept 2014 Jasper is an eligible jobholder on the assessment date of 24 August and his automatic enrolment date is 24 August. Definition of pay reference periods aligned to tax week or months at the change in the tax year 189. We ve set out the legislative requirements which underpin the assessment of earnings. Having done that we can now go back and explain how, when using the definition of a pay reference period aligned with tax weeks or months the assessment of earnings works when the tax year changes and the pay reference period calendar resets Where the usual interval between payments of a worker s regular wage or salary is a week or a multiple of a week there are overlapping pay reference periods around the 6 April each year. This is because the last pay reference period of the tax year starts on 4 or 5 April (if the usual interval between payments of regular wage or salary is weekly, fortnightly or four-weekly) and the first pay reference period of the next tax year starts on 6 April (as illustrated below). A detailed guide to Automatic enrolment for software developers 56

57 Relevant pay reference periods across the tax year change (where the definition of a pay reference period is aligned to tax weeks or months) Examples of a four-weekly pay interval, in a leap year 4/4 1/5 Last PRP of /4 3/5 First PRP of In most circumstances however the last pay reference period is ended early on 5 April to avoid this overlap. Ending the pay reference period on 5 April depends upon when qualifying earnings are payable. If, in that last pay reference period of the tax year the qualifying earnings that are payable in that pay reference period are paid or payable on or after 6 April the pay reference period is ended on 5 April To establish whether the last pay reference period of the tax year ends on 5 April, the employer needs to consider that last pay reference period on its own ignoring the fact that they know that the first pay reference period of the following tax year is running alongside. In looking at the last pay reference period of the tax year and assessing whether qualifying earnings are payable in that period as a normal part of the assessment process for that pay reference period the employer will identify the date that those qualifying earnings (if any) are due to be paid If this date is on or after 6 April then the pay reference period is ended on 5 April. So practically if the pay date for the last pay reference period of the tax year is on or after 6 April then the pay reference period is ended (regardless of the fact that this may also be the pay date for the first pay reference period of the next tax year) For example, Employer A has a usual interval between payments of its worker s regular wage or salary of four weeks. The length of the pay reference period for the purposes of the assessment of a worker is therefore four weeks. Employer A is therefore using the four-weekly pay reference period calendar and knows that the last pay reference period of a tax year when the pay reference period is four-weekly in length starts on 4 April (in the case of a leap year) and ends on 1 May. Employer A also knows that the first pay reference period of the new tax year when the pay reference period is fourweekly in length starts on 6 April and ends on 3 May. Employer A s pay date in this example is on 10 April. A detailed guide to Automatic enrolment for software developers 57

58 195. If employer A were to assess their workers for each pay reference period separately then for the pay reference period of 4 April to 1 May they would need to identify whether qualifying earnings were payable in this period and whether they are above the earnings trigger for automatic enrolment. The qualifying earnings that are due to be paid in this period are those payable on 10 April. Similarly for the pay reference period of 6 April to 3 May they would need to identify whether qualifying earnings were payable in this period and whether they are above the earnings trigger for automatic enrolment. Again the qualifying earnings are those same qualifying earnings that are due to be paid in this period are those payable on 10 April But irrespective of the fact that the qualifying earnings payable are payable in both pay reference periods Employer A knows that for the pay reference period of 4 April to 1 May the qualifying earnings payable in that period are payable on 10 April. As this is after the 6 April then that last pay reference period is ended on 5 April the day before the start of the first pay reference period (see diagram below). Relevant pay reference periods across the tax year change (where the definition of a pay reference period is aligned to tax weeks or months) Example of a four-weekly pay interval, in a leap year 4/4 Last PRP (contribution 1/5 entitlement) of 2015/16 6/4 First PRP (contributions entitlement) of 2016/17 3/5 Qualifying earnings are payable on this date (10 April) Qualifying earnings for the pay reference period 4/4-1/5 are payable on 10 April, therefore this pay reference period is ended on 5 April and becomes: + 4/4-5/4 6/4 3/5 A detailed guide to Automatic enrolment for software developers 58

59 197. In this last pay reference period of the tax year which was ended on 5 April qualifying earnings are not payable. As a result the worker is an entitled worker for this pay reference period An employer should be aware that if the first day of this last pay reference period of the tax year that has now ended on 5 April is the first time that the worker has met the entitled worker category and they have not previously issued the information about the right to join a pension scheme for example as part of a postponement notice, then this information requirement will be triggered from the start of the pay reference period The first pay reference period of the tax year is then assessed as normal. If the thresholds of qualifying earnings are changed in the legislation then any change takes affect from 6 April. Where the last pay reference period of a tax year is ended on 5 April the next pay reference period starts on 6 April and so the pay reference periods do not span any change in the qualifying earnings threshold or earnings trigger for automatic enrolment. Qualifying earnings payable before 6 April 200. If, on the other hand, in that last pay reference period of a tax year the qualifying earnings that are payable are payable before 6 April the pay reference period is not ended early and runs alongside the first pay reference period in the next tax year This means that an employer will have to assess their workers for each pay reference period separately It is important to note that for weekly, fortnightly and four-weekly pay reference periods the last pay reference period starts on 5 April (or 4 April in a leap year) so it will only be in cases where pay date falls on 5 April (or 4 April in a leap year) that this scenario of separately assessing overlapping pay reference periods at the change in the tax year will be relevant The employer must assess each pay reference period separately even though the assessment date may be the same in each pay reference period, for example, if a worker s 22nd birthday falls in the period when both pay reference periods overlap. In practice, though the qualifying earnings payable in each pay reference period are likely to be different (see example below). A detailed guide to Automatic enrolment for software developers 59

60 Relevant pay reference periods across the tax year change (where the definition of a pay reference period is aligned to tax weeks or months) Example of a four-weekly pay interval, in a leap year 4/4 Last PRP (contribution 1/5 entitlement) of 2015/16 6/4 First PRP (contributions entitlement) of 2016/17 3/5 Qualifying earnings are payable on 5 April and 3 May Qualifying earnings for the pay reference period 4/4-1/5 are payable on 5 April, therefore this pay reference period runs alongside the pay reference period of 6/4-3/5 as above In this example, the employer assesses their worker for the pay reference period 4 April to 1 May. The assessment date is the first day of the pay reference period. The qualifying earnings that are payable are those that are payable on 5 April. If the worker is aged between 22 and SPA on day one of the pay reference period (4 April) then automatic enrolment is triggered (unless the employer chooses to use postponement) and the automatic enrolment date is 4 April If the eligible jobholder criteria are not met the employer next assesses their worker for the pay reference period 6 April to 3 May. The qualifying earnings that are payable are those that are due to be paid on 3 May. If the worker is aged between 22 and State Pension Age (SPA) on day one of the pay reference period (6 April) then automatic enrolment is triggered (unless the employer chooses to use postponement) and the automatic enrolment date is 6 April. If the eligible jobholder criteria are not met the employer next assesses their worker for the pay reference period 4 May to 31 May and so on. Assessment dates that fall in both pay reference periods 206. Sometimes, if the assessment date is other than the first day of the pay reference period, the assessment date may fall in both pay reference periods. In this case the worker is assessed as at the assessment date in both pay reference periods (see example below). A detailed guide to Automatic enrolment for software developers 60

61 Example 4 Emma turns 22 on 10 April. Her employer has chosen to use the definition of a pay reference period aligned to tax weeks or months. The employer identified that the usual interval between payments of Emma s regular wage or salary was weekly and therefore that Emma s pay reference periods are weekly starting on the first day of the tax week. Her employer knows that the last pay reference period of the tax year is the one 5 April (not a leap year) to 11 April. They also know that the next pay reference period is the starting on 6 April to 12 April. In the pay reference period of 5 April to 11 April the qualifying earnings that are payable in that period are due to be paid on 5 April. The employer determines therefore that this pay reference period is not ended on 5 April and runs for the whole week. Emma s qualifying earnings are 195 per week. 5/4 11/4 6/4 12/4 22nd birthday 10/4 Qualifying earnings are payable on this date Emma s employer identifies that one relevant pay reference period for Emma is 5 April to 11 April as this is one pay reference period in which the assessment date (her 22nd birthday (10 April)) falls. The qualifying earnings payable in this period are those that are due to be paid on 5 April ie 195. Her employer compares this against the weekly earnings trigger for automatic enrolment that applies for the tax year starting on 6 April (as this is the earnings trigger that applies at the assessment date (10 April)) and identifies that Emma is an eligible jobholder and automatic enrolment is triggered (unless the employer chooses to use postponement). Her automatic enrolment date is 10 April. continued... A detailed guide to Automatic enrolment for software developers 61

62 Her employer also knows that another relevant pay reference period for Emma is 6 April to 12 April as this is one pay reference period in which the assessment date falls (her 22nd birthday (10 April)). The qualifying earnings payable in this period are those that are due to be paid on 12 April ie 195. Her employer compares this against the weekly earnings trigger for automatic enrolment that applies for the tax year starting on 6 April (as this is the earnings trigger that applies at the assessment date) and identifies that Emma is an eligible jobholder and automatic enrolment is triggered (unless the employer chooses to use postponement). Her automatic enrolment date is 10 April As the assessment in both pay reference periods may include different amounts of qualifying earnings, the result of each assessment may differ. If automatic enrolment is triggered in the first assessment (ie the earlier pay reference period starting on 4 or 5 April) then automatic enrolment must be completed (unless the employer chooses to use postponement) even if in the second assessment (ie the later pay reference period starting on 6 April) qualifying earnings have fallen. Example 4a Consider Emma s example again if her qualifying earnings payable on 5 April are 150 and the qualifying earnings payable on 12 April are 200. In this case, in the pay reference period of 5 April to 11 April Emma s employer identifies that the qualifying earnings payable are below the earnings trigger for automatic enrolment but above the lower qualifying earnings threshold and so Emma is a non-eligible jobholder on her 22nd birthday. In the pay reference period of 6 April to 12 April here employer identifies that the qualifying earnings payable in the relevant pay reference period are above the earnings trigger for automatic enrolment and identifies that Emma is an eligible jobholder and automatic enrolment is triggered (unless the employer chooses to use postponement). Her automatic enrolment date is 10 April. continued... A detailed guide to Automatic enrolment for software developers 62

63 Conversely, if her qualifying earnings payable on 5 April are 200 and the qualifying earnings payable on 12 April are 150, then in the pay reference period of 5 April to 11 April Emma s employer identifies the qualifying earnings payable in the relevant pay reference period are above the earnings trigger for automatic enrolment and identifies that Emma is an eligible jobholder and automatic enrolment is triggered (unless the employer chooses to use postponement). Her automatic enrolment date is 10 April. In the next pay reference period of 6 April to 12 April Emma s earnings have fallen and in this later pay reference period Emma is a non-eligible jobholder at her 22nd birthday. However this is the later pay reference period and automatic enrolment has already been triggered in the assessment for 5 April to 11 April This may mean that in the assessment of the last pay reference period starting on 5 or 4 April (if the usual interval between payments of regular wage or salary is weekly, fortnightly or fourweekly) there will be some workers with an assessment date of the first day of the pay reference period and the lower level threshold for qualifying earnings and the earnings trigger for automatic enrolment that applies is the one for the tax year ending on 5 April. But there may also be some workers with a later assessment date in that last pay reference period when the lower level threshold for qualifying earnings and the earnings trigger for automatic enrolment that applies is the one for the tax year starting on 6 April and the amounts of the lower threshold and earnings trigger may have changed More information for employers with supplementary payrolls so that there is more than one date when the qualifying earnings in that last pay reference period are paid or payable can be found at paragraphs 375 to 379. A detailed guide to Automatic enrolment for software developers 63

64 Changing from one definition of pay reference period (for the purposes of assessment) to another 210. An employer with a staging date before 1 November 2013 will have been using the definition of a pay reference period aligned with the period by reference to which a worker is paid their regular wage or salary. From the 1 November 2013 that employer can choose to change to using the definition of a pay reference period aligned with tax weeks or months as the basis of their assessment process If an employer determines to change their assessment process from using one definition of a pay reference period to another, they should be aware that at the time of the change there will be overlapping pay reference periods. There is nothing in the legislation which ends the last pay reference period under the old definition before the start of the first pay reference period under the new definition For example, an employer who uses the definition of a pay reference period aligned to the period by reference to which the worker is paid their regular wage or salary decides to change to the definition of pay reference period aligned to tax weeks or months from June. The pay reference period under the old definition was a calendar month starting on the first calendar day The employer at the time of the change has one pay reference period (under the old definition) that runs from 1 June to 30 June, running alongside a pay reference period (under the new definition) of 6 June to 5 July The same approach as discussed where pay reference periods overlap at the change in tax year (under the definition of a pay reference period aligned with tax weeks or months) in paragraphs 189 to 209 above apply in this case here where there are overlapping pay reference periods. The only difference is that in this case the qualifying earnings payable in the two pay reference periods are likely to be those payable on the same date (as illustrated below). A detailed guide to Automatic enrolment for software developers 64

65 Relevant pay reference periods when changing from one definition of a pay reference period to another 1/6 30/6 Last PRP under definition signed to period by reference to which the worker is paid their regular wage or salary 6/6 5/7 First PRP under definition aligned to tax weeks or months Qualifying earnings are payable on this date (28/6) Example 5 Employer B has decided to change from using the definition of a pay reference period aligned to the period by reference to which the worker is paid their regular wage or salary to using the definition aligned to tax weeks or months from June. Under the existing definition they were applying they had identified that their workers had a calendar monthly pay reference period starting on the first calendar day of the month. For one of their workers, Justine, they also chose to use postponement for the maximum duration of 3 months when she met the criteria to be an eligible jobholder on 4 March. The deferral date for Justine is 4 June. Her employer knows that the relevant pay reference period is the one that runs from 1 June to 30 June under the definition of a pay reference period aligned to the period by reference to which the worker is paid their regular wage or salary as this is the one in which the deferral date falls. In this pay reference period the qualifying earnings payable are those that are due to be paid on 28 June 900. Her employer identifies that this above the monthly earnings trigger for automatic enrolment and so Justine is an eligible jobholder on the deferral date. Employer B must automatically enrol Justine from the automatic enrolment date of 4 June. continued... A detailed guide to Automatic enrolment for software developers 65

66 Deferral date (4 June) Qualifying earnings are payable on this date (28 June) Assessment date (3 June deferral date) 1/6 Last PRP under definition 30/6 aligned to period by reference to which the worker is paid their regular wage or salary 6/6 First PRP under 5/7 definition aligned to tax weeks or months Assessment date (6 June first day of the pay reference period) In the next pay reference period (which is the first under the new definition) of 6 June to 5 July, the assessment date for Justine is the first day of the pay reference period (ie 6 June). In this pay reference period the qualifying earnings payable are those that are due to be paid on 28 June 900. Under the new definition the length of the pay reference period is monthly so Employer B compares the amount of qualifying earnings ( 900) against the same monthly earnings trigger for automatic enrolment ( 833) and identifies that Justine is an eligible jobholder on the 6 June. However automatic enrolment was triggered on 4 June and active membership of the automatic enrolment scheme must take effect from this date. On 6 June therefore Justine is an active member of a qualifying scheme and so automatic enrolment is not triggered. continued... A detailed guide to Automatic enrolment for software developers 66

67 Employer B has another worker, Ranjit, who turns 22 on 26 June. Qualifying earnings are payable on this date (28 June) 22nd birthday (26 June) 1/6 Last PRP under definition aligned to period by reference to which the worker is paid their regular wage or salary 30/6 Assessment date (26 June 22nd birthday) 6/6 First PRP under 5/7 definition aligned to tax weeks or months Assessment date (26 June 22nd birthday) Employer B identifies that one relevant pay reference period for Ranjit is 1 June to 30 June as this is one pay reference period in which the assessment date (his 22nd birthday (26 June)) falls. The qualifying earnings payable in this period are those that are due to be paid on 28 June ( 1,000). Employer B compares this against the monthly earnings trigger for automatic enrolment and identifies that Ranjit is an eligible jobholder and automatic enrolment is triggered (unless they choose to use postponement). His automatic enrolment date is 26 June. A detailed guide to Automatic enrolment for software developers 67

68 Section reminder header/previous paragraph continued... Employer B also identifies that one relevant pay reference period for Ranjit is 6 June to 5 July as this is one pay reference period in which the assessment date (his 22nd birthday (26 June)) falls. The qualifying earnings payable in this period are also those that are due to be paid on 28 June ( 1,000). Under the new definition the length of the pay reference period is monthly so Employer B compares the amount of qualifying earnings ( 1,000) against the same monthly earnings trigger for automatic enrolment ( 833) and identifies that Ranjit is an eligible jobholder and automatic enrolment is triggered (unless they choose to use postponement). His automatic enrolment date is 26 June Although an employer might decide for an individual worker that practically they only need carry out one assessment of the first pay reference period of the new year, for example because the 22nd birthday (as in the Ranjit example above) falls in the period of the overlap between the two pay reference periods, across their workforce there will invariably be at least one worker with an assessment date of the first day of the last pay reference period in the preceding tax year Therefore there will be a need for two assessments across their workforce generally in order to identify the first time that the worker category criteria are met and the associated employer duties. In the example above if Employer B only assessed Justine in the first pay reference period under the new definition of a pay reference period they would have identified the incorrect automatic enrolment date of 6 June Some employers have set business rules around the use of postponement and we are aware that some software also has set rules for the use of postponement. In this case, employers and developers may wish to build in a two to three month period ahead of any switch in the definition of a pay reference period for assessment so that they can align their postponement rules with the new definition of a pay reference period. A detailed guide to Automatic enrolment for software developers 68

69 218. For example, an employer currently using the definition of a pay reference period aligned to the period by reference to which the worker is paid their regular wage or salary has monthly pay reference period that starts on the first calendar of the month. They operate a business rule that they will always use postponement for new starters and the deferral day will be the first day of the pay reference period immediately before the end of the three months from the day after the first day of employment. They use this rule to ensure that should automatic enrolment be triggered on the deferral date it will be from the start of a pay reference period and so avoid the need for part period contribution calculations This employer decides to switch to using the definition of pay reference period aligned to tax weeks or months from October. The first pay reference period under the new definition will be the one from 6 October to 5 November. A new starter on 5 August is postponed under the employer s business rules. At the time of the postponement notice in August if the employer had not yet decided on any change in the definitions the deferral date under their business rule and included in the postponement notice would be 1 November. This falls part way through the pay reference period of 6 October to 5 November If the employer had been aware at the time of giving the postponement notice that they were going to adopt the new definition of a pay reference period in October, then the deferral date under their business rules and included in the postponement notice could have been set to 6 October thereby avoiding any possible part period contribution calculations Once the deadline for giving a postponement notice has passed a deferral date cannot be changed from that included in the notice. 2.3 Pension contributions 222. We are often asked about the calculation of contributions by developers. It is important to note that the actual process of calculating and paying contributions is unchanged by any of the new employer duties. The employer is not obliged to calculate and deduct contributions according to any formula set out in the legislation. A detailed guide to Automatic enrolment for software developers 69

70 223. However, the legislation does set a minimum contribution requirement. This requirement which is part of the criteria to be met if the defined contribution (DC) scheme is to be a qualifying scheme or an automatic enrolment scheme is that under the scheme rules or governing documentation: the employer must make contributions in respect of the jobholder a total minimum contribution, however calculated, must be at least 8% of the jobholder s qualifying earnings in the relevant pay reference period a minimum employer s contribution, however calculated, must be at least 3% of the jobholder s qualifying earnings in the relevant pay reference period. These contribution levels are gradually increased in three steps over the period 1 July 2012 to 1 October This is known as phasing The minimum contribution requirement therefore is that the pension scheme must have provisions in their governing documentation that gives an entitlement to contributions of at least this amount Although the legislation uses the same terminology pay reference period and relevant pay reference period in the jobholder or entitled worker criteria and the minimum contribution requirement, the phrases are defined differently in the legislation depending on what it is being used for Throughout the remainder of this section of the guidance when referring to pay reference period or relevant pay reference period for the purposes of the assessing the category of worker we will use the terms pay reference period (assessment) and relevant pay reference period (assessment), as appropriate. And when referring to pay reference period or relevant pay reference period for the purposes of the minimum contribution requirement we will use the terms pay reference period (contribution entitlement) and relevant pay reference period (contribution entitlement) as appropriate The key words in the minimum contribution requirement are however calculated. This means that the scheme rules can provide for the contribution entitlement in different ways. For example, if 8% of a jobholders qualifying earnings in a pay reference period (contribution entitlement) is 100 then if the definition of pensionable pay and the contribution rate in the scheme rules give an entitlement to 100 or more in the same pay reference period (contribution entitlement) then the scheme will meet the minimum contribution requirement. A detailed guide to Automatic enrolment for software developers 70

71 228. In order to be able to use a scheme for their automatic enrolment duties the employer is responsible for satisfying themselves that the pension scheme they intend to use meets a number of qualifying criteria. Once the employer has examined the pension scheme rules/governing documentation and is satisfied it meets the qualifying criteria, then the contributions to be deducted and paid are determined by the rules of/agreements with the pension scheme itself There is no requirement to check the amount of contributions that are actually paid for the purposes of establishing if the pension scheme meets the minimum requirements since the requirement is one of entitlement to contributions under the scheme rules or governing documentation. However, an employer will still need to ensure that they are making the correct payments on time, as required by the pension scheme under the existing law on payment of contributions As the mechanics of calculating contributions is unchanged by the new duties, the rules (or other governing documentation) of a pension scheme will, as now, specify: a. what components of pay the pension contribution is calculated on ( pensionable pay). This may include a disregard of some components of pay for example if pensionable pay in the scheme rules uses qualifying earnings, or disregards other earnings perhaps as an offset against the state pension b. the rate of contributions to be applied to that pensionable pay c. when the first contribution is due d. when the last contribution is due, for example some scheme rules provide that the last contribution is due on the pay in the period before the period in which a worker reaches SPA, and e. the due date for paying those contributions For this reason, this guide does not provide the rules for payroll systems to calculate pension contributions under the new duties. From a developers perspective, the functionality required is as now a means for the employer to select the components of pay that are pensionable under the rules or governing documentation of the pension scheme they have chosen to use, somewhere to add the contribution rate and how to cope with the first and last contribution if there are specific variations in the pension scheme rules/governing documentation. A detailed guide to Automatic enrolment for software developers 71

72 232. As discussed there are various ways that the entitlement to contributions in the scheme rules or governing documentation may meet or exceed the minimum contribution requirement. One way is if the scheme rules or governing documentation explicitly define pensionable pay as the amount of the jobholder s qualifying earnings in the relevant pay reference period. In this guidance we will refer to a pension scheme with such a definition of pensionable pay as a minimum requirement pension scheme It is important to note that some pension scheme rules may define qualifying earnings as pensionable pay (ie the same components of pay between the lower and upper levels of qualifying earnings) but these are not a minimum requirement pension scheme The contribution rate in a minimum requirement pension scheme may vary. For example, some may start at the minimum levels under phasing, whilst some may provide for the minimum levels once phasing has ended. Some scheme rules may exceed the minimum levels Where the rules or governing documentation of a minimum requirement pension scheme explicitly state that: the employer s contribution is 1% (during the first phasing period) of the amount of the jobholder s qualifying earnings in the relevant pay reference period, and the jobholder s contribution is 1% (during the first phasing period) of the amount of the jobholder s qualifying earnings in the relevant pay reference period. This is the lowest entitlement under a scheme that would meet the minimum contribution requirement and give the lowest employer contribution Sometimes the rules or governing documentation of a pension scheme may contain the lowest minimum requirement as an underpin to the existing alternative definition of pensionable pay and contribution rate. For example, under the scheme the contributions due are the greater of the existing scheme rules or those stated at paragraph 223. We include pension schemes with this underpin in their rules or governing documentation in the reference to a minimum requirement pension scheme. A detailed guide to Automatic enrolment for software developers 72

73 237. Minimum requirement pension schemes are fundamentally no different to any other pension scheme when it comes to the calculation of contributions. The scheme rules or governing documentation will still specify: what is pensionable pay the rate of contributions to be applied to that pensionable pay when the first contribution is due when the last contribution is due, and the due date for paying those contributions. Also the functionality required in any system for calculating the contributions is still essentially the same ie a mechanism for inputting and identifying pensionable pay, contribution rates and the ability to cope with any variations over the first and last contribution according to individual scheme rules The only additional concept is that in the definition of pensionable pay there will be a specified period over which the entitlement to contributions is calculated. This period is the relevant pay reference period (contribution entitlement) and is unlikely to be the same as the scheme year So it is only where the pension scheme is a minimum requirement pension scheme that developers providing a payroll system (for the calculation of contributions) need to understand what is the relevant pay reference period (contribution entitlement). The relevant pay reference period for a minimum requirement pension scheme 240. The first step in identifying the relevant pay reference period (contribution entitlement) is to identify the usual pay reference period (contribution entitlement). From 1 November 2013 a pay reference period (contribution entitlement) can be defined in one of three ways: a. A 12 month period (although there are circumstances where it will be shorter) aligned to an employer s staging date. This is the definition of a pay reference period (contribution entitlement) that has applied since 1 July b. A period equal in length to the usual interval between payments of the jobholder s regular wage or salary. This is broadly the same as the definition of a pay reference period (assessment) aligned to tax weeks or months which an employer may choose to use for assessment of worker category. A detailed guide to Automatic enrolment for software developers 73

74 c. A period equal in length to the period by reference to which the jobholder is paid their regular wage or salary. This is broadly the same as the definition of a pay reference period (assessment) aligned to the period by reference to which a worker is paid their regular wage or salary which an employer may choose to use for assessment of worker category From 1 November an employer currently using the 12 month definition aligned to an employer s staging date will be able to choose to switch to one of the alternative definitions providing the scheme rules or governing documentation provide for the use of those different definitions We describe each of these definitions of a pay reference period (contribution entitlement) in relation to a minimum requirement pension scheme in the paragraphs below. Definition of pay reference period (contribution entitlement) aligned to the employer s staging date 243. Under this definition the pay reference period (contribution entitlement) is a period of 12 months that starts on the employer s staging date or on each subsequent anniversary of the staging date and ends on the day before the anniversary of the employer s staging date In some cases the pay reference period (contribution entitlement) will be shorter in length either because of when it starts or when it ends The first pay reference period (contribution entitlement) starts on the first day on or after the staging date that the person is both a jobholder and an active member of a qualifying scheme. Active membership may be as a result of automatic enrolment, re-enrolment or enrolment (opt in). In this case the first day that the worker is both a jobholder and an active member of a qualifying scheme will be the automatic enrolment date, re-enrolment date or enrolment date (opt in) Or, active membership may be as a result of the employer using contractual enrolment or the worker may already be an active member on the employer s staging date having previously joined the scheme prior to the staging date. In this latter case the first day that the worker is both a jobholder and an active member of a qualifying scheme will be the first day that they are a jobholder after active membership has started or after the employer s staging date As a result the first pay reference period (contribution entitlement) may be a period of less than a year. A detailed guide to Automatic enrolment for software developers 74

75 Examples Adam s automatic enrolment date is 12 May His employer s staging date was 1 October Adam s first pay reference period (contribution entitlement) is 12 May 2014 to 30 September Orla became an active member of a qualifying scheme on 23 July Her employer s staging date was 1 February On this date Orla was an entitled worker. In March her earnings increased and on 1 March 2014 Orla was a non-eligible jobholder. Her first pay reference period (contribution entitlement) is 1 March 2014 to 31 January Sol gave his employer an opt-in notice on 9 February His enrolment date is 23 February His employer s staging date was 1 April His first pay reference period (contribution entitlement) is 23 February 2015 to 31 March What it means for a minimum requirement pension scheme Contribution rule under the scheme rules is an employer contribution of x% (eg 1%) of the amount of Adam s qualifying earnings in the period 12 May 2014 to 30 September 2014, and a jobholder contribution of x% (eg 1%) of the amount of Adam s qualifying earnings in the period 12 May 2014 to 30 September Contribution rule under the scheme rules is an employer contribution of x% (eg 1%) of the amount of Orla s qualifying earnings in the period 1 March 2014 to 31 January 2015, and a jobholder contribution of x% (eg 1%) of the amount of Orla s qualifying earnings in the period 1 March 2014 to 31 January Contribution rule under the scheme rules is an employer contribution of x% (eg 1%) of the amount of Sol s qualifying earnings in the period 23 February 2015 to 31 March 2015, and a jobholder contribution of x% (eg 1%) of the amount of Sol s qualifying earnings in the period 23 February 2015 to 31 March The pay reference period (contribution entitlement) ends earlier than the day before the anniversary of the employer s staging date if the worker ceases to be a jobholder (eligible or non-eligible). If this happens the pay reference period (contribution entitlement) ends on the day that jobholder status ceases, and so in this case may be less than a year In these circumstances the next pay reference period (contribution entitlement) starts on the day jobholder status is regained. A detailed guide to Automatic enrolment for software developers 75

76 Examples Amir s automatic enrolment date is 12 September His employer s staging date was 1 November His first pay reference period (contribution entitlement) is 12 September 2013 to 31 October The next pay reference period (contribution entitlement) is 1 November 2013 to 31 October However, in April 2014 Amir reduces his hours and as a result his earnings drop and he becomes an entitled worker from 16 April This ends the pay reference period (contribution entitlement) that started on 1 November 2013 on the day that jobholder status ceased (ie 15 April 2014). In August 2014 Amir increases his hours and his earnings increase above the lower level of qualifying earnings. Amir becomes a jobholder again from 19 August. The next pay reference period (contribution entitlement) is 19 August 2014 to 31 October 2014 (assuming Amir retains jobholder status). What it means for a minimum requirement pension scheme Contribution rule under the scheme rules is an employer contribution of x% (eg 1%) of the amount of Amir s qualifying earnings in the period 12 September 2013 to 31 October 2013, and a jobholder contribution of x% (eg 1%) of the amount of Amir s qualifying earnings in the period 12 September 2013 to 31 October Contribution rule under the scheme rules is an employer contribution of x% (eg 1%) of the amount of Amir s qualifying earnings in the period 1 November 2013 to 15 April 2014, and a jobholder contribution of x% (eg 1%) of the amount of Amir s qualifying earnings in the period 1 November 2013 to 15 April Contribution rule under the scheme rules is an employer contribution of x% (eg 1%) of the amount of Amir s qualifying earnings in the period 19 August 2014 to 31 October 2014, and a jobholder contribution of x% (eg 1%) of the amount of Amir s qualifying earnings in the period 19 August 2014 to 31 October No contribution is payable under the scheme for the period 16 April 2014 to 18 August The pay reference period (contribution entitlement) also ends earlier than the day before the anniversary of the staging date if the worker ceases to be an active member of a qualifying scheme. This could be because the worker leaves employment, opts out or ceases membership of the pension scheme voluntarily or it could be because the scheme ceases to be a qualifying scheme. Where active membership of a qualifying scheme ceases, the pay reference period (contribution entitlement) ends on the day that the active membership of a qualifying scheme ceased. A detailed guide to Automatic enrolment for software developers 76

77 Examples Lucy became an active member of a qualifying scheme with her employer through contractual enrolment on 5 January Lucy is 23 and has earnings above the earnings trigger for automatic enrolment and so meets the eligible jobholder criteria. Her employer s staging date was 1 February Lucy ceased active membership under the scheme rules on 3 March Her first pay reference period (contribution entitlement) was 1 February 2014 to 3 March Amy s automatic enrolment date was 23 May Her employer s staging date was 1 June Her first pay reference period (contribution entitlement) was 23 May 2015 to 31 May The next pay reference period (contribution entitlement) was 1 June 2015 to 31 May Amy leaves employment on 17 September This ends the pay reference period (contribution entitlement) that started on the anniversary of the employer s staging date (ie 1 June 2016) on the day that Amy leaves employment. What it means for a minimum requirement pension scheme Contribution rule under the scheme rules is an employer contribution of x% (eg 1%) of the amount of Lucy s qualifying earnings in the period 1 February 2014 to 3 March 2014, and a jobholder contribution of x% (eg 1%) of the amount of Lucy s qualifying earnings in the period 1 February 2014 to 3 March Contribution rule under the scheme rules is a an employer contribution of x% (eg 1%) of the amount of Amy s qualifying earnings in the period 23 May 2015 to 31 May 2015, and a jobholder contribution of x% (eg 1%) of the amount of Amy s qualifying earnings in the period 23 May 2015 to 31 May Contribution rule under the scheme rules is an employer contribution of x% (eg 1%) of the amount of Amy s qualifying earnings in the period 1 June 2015 to 31 May 2016, and a jobholder contribution of x% (eg 1%) of the amount of Amy s qualifying earnings in the period 1 June 2015 to 31 May Contribution rule under the scheme rules an employer contribution of x% (eg 1%) of the amount of Amy s qualifying earnings in the period 1 June 2016 to 17 September 2016, and a jobholder contribution of x% (eg 1%) of the amount of Amy s qualifying earnings in the period 1 June 2016 to 17 September Finally the pay reference period (contribution entitlement) ends earlier than the day before the anniversary of the staging date if the definition of pay reference period (contribution entitlement) is being changed to one of the other options. In this case it ends the day before the start of the first pay reference (contribution entitlement) under the new definition. More information on switching from one definition to another can be found at paragraphs 308 to 312. A detailed guide to Automatic enrolment for software developers 77

78 252. In our view, each pay reference period (contribution entitlement) in the period whilst the jobholder is an active member of the minimum requirement pension scheme is the relevant pay reference period (contribution entitlement). Maintaining contributions 253. As illustrated in the previous examples the entitlement due under the scheme rules, under this definition of pay reference period (contribution entitlement), is dependent upon the amount of the jobholder s qualifying earnings in a 12 month period (or shorter period where relevant) aligned to the employer s staging date The amount of the jobholder s qualifying earnings in a 12 month period (or shorter cannot be known until the end of the 12 month period unless the worker is a salaried worker with earnings that do not fluctuate To combat this difficulty, an employer and the trustees or managers of a minimum requirement pension scheme when establishing the scheme may decide on an amount of contributions to be calculated and paid across each time workers are assessed (ie on the basis of the pay reference period (assessment)). Often the amount agreed on this basis is an employer contribution of x% (eg 1%) of the amount of the jobholder s qualifying earnings in the pay reference period (assessment), and a jobholder contribution of x% (eg 1%) of the amount of the jobholder s qualifying earnings in the pay reference period (assessment) The pay reference period (assessment) is unlikely to be 12 months in length and even if it were it is unlikely to be the same 12 month period as the 12 month pay reference period (contribution entitlement) (ie the calculation of what is due under the scheme) What this means in practice is that such a calculation of an amount of contributions to be paid across to the scheme as a payment towards the overall entitlement due under the scheme rules will often result in a shortfall or an overpayment of contributions paid in the 12 month relevant pay reference period (contribution entitlement) compared to what was due under the scheme rules. The reason for this is the operation of qualifying earnings as a band of earnings between a lower and an upper level The entitlement (ie what is due under the scheme) is based on qualifying earnings on an annual basis (pro rata for a shorter period) and so the annual lower level and upper level of qualifying earnings apply. But when a payroll system calculates contributions on a pay reference period (assessment) basis the equivalent lower and upper level of qualifying earnings threshold will apply. For example, if the pay reference period (assessment) is monthly it will be the monthly qualifying earnings thresholds that are applied to the calculation. A detailed guide to Automatic enrolment for software developers 78

79 259. Where earnings fluctuate the effect of the operation of thresholds equivalent to the pay reference period (assessment) is that earnings that would not be disregarded for contribution calculation on an annual basis may be disregarded for the contribution calculation on a monthly, weekly (or other) basis For example, the gross earnings for Worker A in the 12 month pay reference period (contribution entitlement) that started on the anniversary of the employer s staging date on 1 April 2014 are 42,000. The contribution rate in the minimum requirement pension scheme is 1%. Worker A s qualifying earnings in the 12 month period (contribution entitlement) are made up of 36,000 salary and a 6,000 bonus. The qualifying earnings in this period therefore are 42,000 minus the lower level of qualifying earnings ( 5,772) which equals 36,228. The entitlement (ie the contributions due) under the scheme rules is an employer contribution of 1% of 36,228 ie and a jobholder contribution also of 1% of 36,228 ie Only earnings below 5,772 are disregarded in the entitlement calculation However, Worker A is paid monthly and has a monthly pay reference period (assessment). A contribution calculation on a monthly pay reference period (assessment) basis means that more earnings are disregarded from the contribution calculation because of the application of the monthly qualifying earnings thresholds (see table below). A detailed guide to Automatic enrolment for software developers 79

80 Month Gross earnings ( ) Qualifying earnings ( ) Employer contribution (1% ) Jobholder contribution (1% ) Notes April 3, , Earnings below the lower level of qualifying earnings for a month, ie 481, are disregarded May 3, , As for April June 3, , As for April July 3, , As for April August 3, , As for April September 3, , As for April October 3, , As for April November 3, , As for April December 3, , As for April January 3, , As for April February 3, , As for April March 9, , As earnings exceed the upper level of qualifying earnings ( 3,489) earnings above and below the monthly threshold for qualifying earnings are disregarded Total ( ) 42, , A detailed guide to Automatic enrolment for software developers 80

81 262. In this example the entitlement due under the scheme was an employer contribution of and the same again for the jobholder contribution in the 12 month pay reference period (contribution entitlement). However the contributions paid across to the scheme during this 12 month pay reference period (contribution entitlement) when calculated on a monthly pay reference period (assessment) basis were as the employer contribution and again as the jobholder contribution In this example there is a shortfall in the contributions paid during the 12 month pay reference period (contribution entitlement) but equally in other circumstances there could be an overpayment of contributions paid against those required under the rules or governing documentation of the scheme Under this definition, therefore, the trustees or managers of a pension scheme as part of their risk based monitoring process will need to reconcile contributions paid against what was due under the rules or governing documentation. As a result there may be a need for additional contribution payments for any shortfall or refunds of contributions for any overpayment We are often asked about the rules for rounding up contributions. As illustrated above the contribution calculation being performed in the pay reference period (assessment) is one that the employer and trustees or managers have agreed as a payment towards the 12 month entitlement due and so is a matter for the trustees or managers and employer when setting up the payment schedule or direct payment arrangements. Definition of a pay reference period (contribution entitlement) aligned with tax weeks or months 266. Under this definition the pay reference period (contribution entitlement) is a period equal in length to the usual interval between payments of the jobholder s regular wage or salary, commencing on the date determined in accordance with paragraph 267 below A pay reference period (contribution entitlement) starts: a. where the person is paid monthly, on the first day of a tax month b. where the person is paid weekly, on the first day of a tax week c. where the person is paid at intervals of multiple weeks, on 6th April; or the first day of the tax week which commences immediately after the expiry of a pay interval period beginning on 6 April A detailed guide to Automatic enrolment for software developers 81

82 d. where the person is paid at intervals of multiple months, on 6 April; or the first day of the tax month which commences immediately after the expiry of a pay interval period beginning on 6 April. A pay interval period is defined under the legislation as a period equal in length to the usual interval between payments of the worker s regular wage or salary and each whole multiple of that period This is broadly similar to the definition of a pay reference period (assessment) aligned to tax weeks or months. However there is a difference as the length of the pay reference period (assessment) is defined as: a. equal in length to the usual interval between payments of the person s regular wage or salary, or b. a week whichever is the longer The effect of this difference is twofold. If there is no usual interval between the payments of regular wage or salary then in our view the pay reference period (assessment) defaults to being one week in length. However, under this definition of a pay reference period (contribution entitlement), if the employer is unable to say that there is a usual interval between payments of the jobholder s regular wage or salary then they cannot use this definition of a pay reference period (contribution entitlement) Secondly, if the usual interval between payments of a worker s regular wage or salary is less than a week, for example two days then the length of the pay reference period (assessment) for that worker will be one week. The pay reference period (assessment) starts on the first day of the tax week because, in our view, the worker is treated as weekly paid for the purposes of the employer duties However, under this definition of a pay reference period (contribution entitlement) whilst the pay reference period (contribution entitlement) is two days in length it does not have a start date under the legislation and so does not fall within the legislative definition. So for workers where the usual interval between payments is less than a week the employer cannot use this definition of a pay reference period (contribution entitlement). A detailed guide to Automatic enrolment for software developers 82

83 272. Where an employer is able to apply this definition of pay reference period (contribution entitlement) and the minimum requirement pension scheme provides for its use the length and pay reference period start and end dates are the same as described in paragraphs 118 to 143 for the corresponding definition of pay reference period (assessment). The only exception is if the definition of pay reference period (contribution entitlement) is being changed to one of the other options. In this case a pay reference period (contribution entitlement) ends the day before the start of the first pay reference period (contribution entitlement) under the new definition. More information on switching from one definition to another can be found at paragraphs 308 to The employer will know the usual pay reference period (contribution entitlement) calendar ie the start and end dates of the pay reference periods (contribution entitlement) in the tax year but the legislative requirement means that entitlement to contributions is in a specific pay reference period the relevant pay reference period (contribution entitlement) The first relevant pay reference period (contribution entitlement) is the first whole pay reference period (contribution entitlement) that starts on or after the date that the worker becomes both a jobholder and an active member of a qualifying scheme for the first time. Active membership may be as a result of automatic enrolment, re-enrolment or enrolment (opt in). In this case the first day that the worker is both a jobholder and an active member of a qualifying scheme will be the automatic enrolment date, reenrolment date or enrolment date (opt in) Or, active membership may be as a result of the employer using contractual enrolment or the worker may already be an active member on the employer s staging date having previously joined the scheme prior to the staging date. In this case the first day that the worker is both a jobholder and an active member of a qualifying scheme will be the first day that they are a jobholder after active membership has started or after the employer s staging date. A detailed guide to Automatic enrolment for software developers 83

84 Examples The usual interval between payments of Fran s regular wage or salary is four-weekly. Fran is 48 years old and her salary is above the earnings trigger for automatic enrolment. She became an active member of a qualifying scheme on her first day of her employment (29 March) as a result of contractual enrolment. 29 March therefore is the first day that Fran is both a jobholder and an active member of a qualifying scheme. 29 March falls within the pay reference period (contribution entitlement) of 8 March to 4 April. The first day of the next pay reference period (contribution entitlement) is 5 April. The pay reference period (contribution entitlement) starting on 5 April is the first whole pay reference period (contribution entitlement) which falls on or after 29 March. The first relevant pay reference period (contribution entitlement) for Fran starts on 5 April and will either end on 5 April or 2 May depending upon the date the qualifying earnings for that pay reference period (contribution entitlement) are payable (see paragraphs 287 to 293 for more information about the pay reference periods (contribution entitlement) at the tax year change). The usual interval between payments of Mark s regular wage or salary is monthly. On the employer s cyclical automatic enrolment date Mark is an eligible jobholder who must be automatically re-enrolled. He is re-enrolled from the cyclical automatic enrolment date of 6 October. This is the first day of the pay reference period (contribution entitlement) of 6 October to 5 November. This pay reference period (contribution entitlement) starting on 6 October is the first whole pay reference period (contribution entitlement) which falls on or after 6 October. The first relevant pay reference period (contribution entitlement) for Mark is 6 October to 5 November. What it means for a minimum requirement pension scheme No contribution is payable under the scheme rules or governing documentation for the period 29 March to 4 April. Contribution rule under the scheme rules is an employer contribution of x% (eg 1%) of the amount of Fran s qualifying earnings in the period 5 April to 5 April (or 2 May), and a jobholder contribution of x% (eg 1%) of the amount of Fran s qualifying earnings in the period 5 April to 5 April (or 2 May), and so on for each relevant pay reference period (contribution entitlement) until the last relevant pay reference period (contribution entitlement). Contribution rule under the scheme rules is an employer contribution of x% (eg 1%) of the amount of Mark s qualifying earnings in the period 6 October to 5 November, and a jobholder contribution of x% (eg 1%) of the amount of Mark s qualifying earnings in the period 6 October to 5 November, and so on for each relevant pay reference period (contribution entitlement) until the last relevant pay reference period (contribution entitlement). continued... A detailed guide to Automatic enrolment for software developers 84

85 Examples The usual interval between payments of Tom s regular wage or salary is weekly. His automatic enrolment date is 15 April This falls within the pay reference period (contribution entitlement) of 12 April to 19 April. The first day of the next pay reference period (contribution entitlement) is 20 April. The pay reference period (contribution entitlement) starting on 20 April is the first whole pay reference period (contribution entitlement) which falls on or after 15 April. The first relevant pay reference period (contribution entitlement) for Tom is 20 April to 26 April. What it means for a minimum requirement pension scheme No contribution is payable under the scheme rules or governing documentation for the period 15 April to 19 April. Contribution rule under the scheme rules is an employer contribution of x% (eg 1%) of the amount of Tom s qualifying earnings in the period 20 April to 26 April 2015, and a jobholder contribution of x% (eg 1%) of the amount of Tom s qualifying earnings in the period 20 April to 26 April, and so on for each relevant pay reference period (contribution entitlement) until the last relevant pay reference period (contribution entitlement) In our view each pay reference period (contribution entitlement) between the first relevant pay reference period (contribution entitlement) and the last pay reference period (contribution entitlement) is a relevant pay reference period (contribution entitlement) The last relevant pay reference period (contribution entitlement) is the pay reference period (contribution entitlement) in which the worker ceases to be a jobholder, or in which active membership of the qualifying scheme ceases. Active membership of a qualifying scheme could be because the worker leaves employment, opts out or ceases membership of the pension scheme voluntarily or it could be because the scheme ceases to be a qualifying scheme. A detailed guide to Automatic enrolment for software developers 85

86 Examples The usual interval between payments of Fran s regular wage or salary is four-weekly. After the start of employment Fran chooses as part of her flexible benefits package to reduce the amount of her pension contributions to below the minimum contribution entitlement. As a result active membership of a qualifying scheme has ceased (although active membership of the scheme as a nonqualifying scheme may continue). The date that active membership of the qualifying scheme is 1 January. This falls within the pay reference period (contribution entitlement) of 14 December to 10 January. This pay reference period (contribution entitlement) is therefore the last relevant pay reference period (contribution entitlement) for Fran. The usual interval between payments of Mark s regular wage or salary is monthly. After his automatic re-enrolment Mark opts out of the qualifying scheme on 10 October. This falls in the pay reference period (contribution entitlement) of 6 October to 5 November which is the same pay reference period (contribution entitlement) in which Mark was both a jobholder and an active member of a qualifying scheme for the first time (opt out can only take place after active membership has been established). The last relevant pay reference (contribution entitlement) is therefore the pay reference period of 6 October to 5 November. What it means for a minimum requirement pension scheme Contribution rule under the scheme rules is an employer contribution of x% (eg 1%) of the amount of Fran s qualifying earnings in the period 14 December to 10 January, and a jobholder contribution of x% (eg 1%) of the amount of Fran s qualifying earnings in the period 14 December to 10 January. No contribution is payable under the scheme rules or governing documentation after 10 January, unless Fran is enrolled (opt in) or automatically re-enrolled into the same scheme. Contribution rule under the scheme rules is an employer contribution of x% (eg 1%) of the amount of Marks s qualifying earnings in the period 6 October to 5 November, and a jobholder contribution of x% (eg 1%) of the amount of Mark s qualifying earnings in the period 6 October to 5 November. No contribution is payable under the scheme rules or governing documentation after 5 November, unless Mark is enrolled (opt in) or automatically re-enrolled into the same scheme. A detailed guide to Automatic enrolment for software developers 86

87 Examples The usual interval between payments of Tom s regular wage or salary is weekly. His automatic enrolment date is 15 April. Tom opts out of the automatic enrolment scheme on 12 May. This falls within the pay reference period (contribution entitlement) of 11 May to 17 May. This pay reference period (contribution entitlement) is therefore the last relevant pay reference period (contribution entitlement) for Tom. What it means for a minimum requirement pension scheme Contribution rule under the scheme rules is an employer contribution of x% (eg 1%) of the amount of Tom s qualifying earnings in the period 11 May to 17 May, and a jobholder contribution of x% (eg 1%) equal to or more than the amount of Tom s qualifying earnings in the period 11 May to 17 May. No contribution is payable under the scheme rules or governing documentation after 17 May, unless Tom is enrolled (opt in) or automatically re-enrolled into the same scheme Where active membership starts part way through a pay reference period (contribution entitlement) as a result of automatic enrolment or re-enrolment, and the jobholder opts out in the same pay reference period (contribution entitlement) this will have the effect of changing the entitlement due under the scheme for that pay reference period (contribution entitlement). (See example below.) A detailed guide to Automatic enrolment for software developers 87

88 Examples Consider Tom again. The usual interval between payments of Tom s regular wage or salary is weekly. His automatic enrolment date is 15 April This falls within the pay reference period (contribution entitlement) of 12 April to 19 April. The first day of the next pay reference period (contribution entitlement) is 20 April. The pay reference period (contribution entitlement) starting on 20 April is the first whole pay reference period (contribution entitlement) which falls on or after 15 April. The first relevant pay reference period (contribution entitlement) for Tom is 20 April to 26 April. Tom opts out of the automatic enrolment scheme on 19 April. This falls within the pay reference period (contribution entitlement) of 12 April to 19 April. This pay reference period (contribution entitlement) is therefore the last relevant pay reference period (contribution entitlement) for Tom. What it means for a minimum requirement pension scheme No contribution is payable under the scheme rules or governing documentation for the period 15 April to 19 April. Contribution rule under the scheme rules is an employer contribution of x% (eg 1%) of the amount of Tom s qualifying earnings in the period 20 April to 26 April 2015, and a jobholder contribution of x% (eg 1%) of the amount of Tom s qualifying earnings in the period 20 April to 26 April, and so on for each relevant pay reference period (contribution entitlement) until the last relevant pay reference period (contribution entitlement). Contribution rule under the scheme rules is an employer contribution of x% (eg 1%) of the amount of Tom s qualifying earnings in the period 12 April to 19 April, and a jobholder contribution of x% (eg 1%) equal to or more than the amount of Tom s qualifying earnings in the period 12 April to 19 April. Until Tom opted out (in the same pay reference period (contribution entitlement)) there was no contribution due under scheme rules or governing documentation for the period 15 April to 19 April. No contribution is payable under the scheme rules or governing documentation after 19 April, unless Tom is enrolled (opt in) or automatically re-enrolled into the same scheme. A detailed guide to Automatic enrolment for software developers 88

89 279. The change in entitlement means that there is an entitlement to a contribution in the pay reference period (contribution entitlement) in which active membership started. The entitlement is to a contribution of the amount of the qualifying earnings in the whole pay reference period (contribution entitlement) and so there is no pro-rata contribution calculation This does not occur where automatic enrolment or re-enrolment is from the first day of a pay reference period (contribution entitlement). Postponement can be used to ensure that automatic enrolment takes effect from the start of a pay reference period. The employer can choose their cyclical automatic re-enrolment date to be the first day of a pay reference period (contribution entitlement) Where the worker becomes an active member of the minimum qualifying pension scheme and a jobholder part way through a pay reference period (contribution entitlement) and then voluntarily ceases active membership of scheme under the scheme rules in the same pay reference period, the same change in entitlement will occur (see example below). This is more likely to be relevant where the pay reference period (contribution entitlement) is longer than a month in length. A detailed guide to Automatic enrolment for software developers 89

90 Examples The usual interval between payments of Judy s regular wage or salary is bi-annual. Her automatic enrolment date is 22 June. This falls within the pay reference period (contribution entitlement) of 6 April to 5 October. The first day of the next pay reference period (contribution entitlement) is 6 October. The pay reference period starting on 6 October is the first whole pay reference period (contribution entitlement) which falls on or after 22 June. The first relevant pay reference period (contribution entitlement) for Judy is 6 October to 5 April. After her automatic enrolment date Judy voluntarily ceases active membership of the scheme under the scheme rules on 15 August. This falls within the pay reference period (contribution entitlement) of 6 April to 5 October. This pay reference period (contribution entitlement) is therefore the last relevant pay reference period (contribution entitlement) for Judy. What it means for a minimum requirement pension scheme No contribution is payable under the scheme rules or governing documentation for the period 22 June to 5 October. Contribution rule under the scheme rules is an employer contribution of x% (eg 1%) of the amount of Judy s qualifying earnings in the period 6 October to 5 April, and a jobholder contribution of x% (eg 1%) of the amount of Judy s qualifying earnings in the period 6 October to 5 April, and so on for each relevant pay reference period (contribution entitlement) until the last relevant pay reference period (contribution entitlement). Contribution rule under the scheme rules is an employer contribution of x% (eg 1%) of the amount of Judy s qualifying earnings in the period 6 April to 5 October, and a jobholder contribution of x% (eg 1%) of the amount of Judy s qualifying earnings in the period 6 April to 5 October. Until Judy voluntarily ceased active membership under the scheme rules (in the same pay reference period (contribution entitlement)) there was no contribution due under scheme rules or governing documentation for the period 22 June to 5 October. No contribution is payable under the scheme rules or governing documentation after 5 October, unless Judy is enrolled (opt in) or automatically re-enrolled into the same scheme. What this means in practice 282. The effect of having a defined first and last relevant pay reference period (contribution entitlement) is that there is no requirement for pro rata contribution calculations for a minimum requirement scheme (see example below). A detailed guide to Automatic enrolment for software developers 90

91 Example 6 AJD Ltd s staging date is 1 August They have chosen to use the definition of pay reference period (assessment) aligned to tax weeks or months. The usual interval between payments of the regular wage or salary for their workers is monthly and so the length of the pay reference period (assessment) is one month and it starts on the first day of a tax month. They have also chosen to use postponement and have postponed all of their workers until 6 October. They used general notice A as their postponement notice. One of their workers is Simon. Simon is 33 years old. AJD Ltd know that the deferral day is an assessment date and so identify that the relevant pay reference period (assessment) for Simon is 6 October to 5 November. Pay reference period (assessment) Deferral date 6/10 Pay date 31/10 6/10 6/11 6/12 Relevant PRP (assessment) 6/10-5/11 Assessment date AJD Ltd know that the next step is to identify whether qualifying earnings are payable in the relevant pay reference period (assessment) and whether qualifying earnings are payable above the earnings trigger for automatic enrolment. In the payroll run for the pay date of 31 October AJD Ltd identifies that the qualifying earnings in the relevant pay reference period (assessment) are This is above the monthly earnings trigger for automatic enrolment and so Simon is an eligible jobholder on the deferral date. AJD Ltd know that they must automatically enrol Simon from his automatic enrolment date of 6 October. continued... A detailed guide to Automatic enrolment for software developers 91

92 The scheme that AJD Ltd are using for automatic enrolment is a minimum requirement pension scheme with an employer and jobholder contribution rate of 1% and which provides for all three definitions of pay reference period (contribution entitlement). AJD Ltd is using the definition of pay reference period (contribution entitlement) aligned to tax weeks or months. Simon s automatic enrolment date is 6 October. This falls within the pay reference period (contribution entitlement) of 6 October to 5 November. As this pay reference period (contribution entitlement) is the first whole pay reference period (contribution entitlement) which starts on or after 6 October the first relevant pay reference period (contribution entitlement) for Simon is 6 October to 5 November. Pay reference period (assessment) Assessment date Deferral date 6/10 Pay date 31/10 6/10 6/11 6/12 6/1 Relevant PRP (assessment) 6/10-5/11 Pay reference period (contribution entitlement) Automatic enrolment date (date both jobholder and an active member of a qualifying pension scheme) 6/10 Pay date 31/10 ( ) 6/10 6/11 6/12 6/1 First relevant PRP (contribution entitlement) 6/10-5/11 continued... A detailed guide to Automatic enrolment for software developers 92

93 The contribution rule under the scheme rules or governing documentation is for a jobholder contribution of 1% of the amount of Simon s qualifying earnings in the period 6 October to 5 November. The amount of qualifying earnings in this period is the amount of the qualifying earnings on 31 October. This is and so the contribution payable to the scheme (and to be deducted from Simon s qualifying earnings) is 1% of ( ) = The contribution rule under the scheme rules or governing documentation is for an employer contribution of 1% of the amount of Simon s qualifying earnings in the period 6 October to 5 November, also Simon does not opt out so in the next relevant pay reference period (contribution entitlement) the contribution rule under the scheme rules or governing documentation is for a jobholder contribution of 1% of the amount of Simon s qualifying earnings in the period 6 November to 5 December. Pay reference period (assessment) 6/10 6/11 6/12 6/1 Pay reference period (contribution entitlement) Active membership started 6/10 Pay date 30/11 ( ) 6/10 6/11 6/12 6/1 Relevant PRP (contribution entitlement) 6/11-5/12 continued... A detailed guide to Automatic enrolment for software developers 93

94 The amount of qualifying earnings in this period is the amount of the qualifying earnings on 30 November. This is and so the contribution payable to the scheme (and to be deducted from Simon s qualifying earnings) is 1% of ( ) = (The employer contribution under the rules is also 1.23) Simon decides to cease active membership of the pension scheme and active membership ceases under the scheme rules on 12 December. This falls within the pay reference period (contribution entitlement) of 6 December to 5 January. As this is the pay reference period (contribution entitlement) in which active membership of a qualifying scheme ceases, the last relevant pay reference period (contribution entitlement) is 6 December to 5 January. Pay reference period (assessment) Day after active membership ceased 13/12 6/10 6/11 6/12 6/1 This would be an assessment date but the employer used postponement and general notice A so has discharged all of their information duties. Automatic enrolment has been discharged too. The next employer duty for AJD Ltd for Simon is at the cyclical re-enrolment date if Simon is an eligible jobholder on that date. Pay reference period (contribution entitlement) Active membership started 6/10 Active membership ceased 12/12 Pay date 30/12 ( ) 6/10 6/11 6/12 6/1 Last relevant PRP (contribution entitlement) 6/12-5/1 continued... A detailed guide to Automatic enrolment for software developers 94

95 The contribution rule under the scheme rules or governing documentation is for a jobholder contribution of 1% of the amount of Simon s qualifying earnings in the last relevant pay reference period (contribution entitlement) of 6 December to 5 January. The amount of qualifying earnings in this period is the amount of the qualifying earnings on 30 December. This is and so the contribution payable to the scheme (and to be deducted from Simon s qualifying earnings) is 1% of ( ) = The contribution rule under the scheme rules or governing documentation is for an employer contribution of 1% of the amount of Simon s qualifying earnings in the period 6 December to 5 January, also In the example above 1% of the amount of qualifying earnings in the first relevant pay reference period (contribution entitlement) equals If 4.29 were deducted from Simon s qualifying earnings this would be less than that required by the pension scheme rules or governing documentation. Therefore the contribution is rounded up to the nearest penny A point to note is that the requirement under the rules is x% of the amount of qualifying earnings in the relevant pay reference period (contribution entitlement); it is not x% of the amount of qualifying earnings earned in the relevant pay reference period (contribution entitlement). This is relevant when it comes to arrears payrolls. In the example above, if Simon were paid in arrears, the qualifying earnings in the period 6 October to 5 November would be those qualifying earnings earned in the earnings period that relates to the pay reference period 6 September to 5 October There is no requirement for pro rata contribution calculations for a minimum requirement pension scheme even where active membership for a jobholder starts part way through a pay reference period (contribution entitlement) (see example below). Example 7 Consider AJD Ltd again. They have chosen to use the definition of pay reference period (assessment) aligned to tax weeks or months. The usual interval between payments of the regular wage or salary for their workers is monthly and so the length of the pay reference period (assessment) is one month and it starts on the first day of a tax month. continued... A detailed guide to Automatic enrolment for software developers 95

96 One of their workers is Neeta. Neeta turns 22 on 14 May. AJD Ltd has chosen not to use postponement at the worker s 22nd birthday. AJD Ltd know that the 22nd birthday is an assessment date and so identify that the relevant pay reference period (assessment) for Neeta is 6 May to 5 June. Pay reference period (assessment) Assessment date 22nd birthday 14/5 Pay date 31/5 6/5 6/6 6/7 Relevant PRP (assessment) 6/5-5/6 AJD Ltd know that the next step is to identify whether qualifying earnings are payable in the relevant pay reference period (assessment) and whether qualifying earnings are payable above the earnings trigger for automatic enrolment. In the payroll run for the pay date of 31 May AJD Ltd identifies that the qualifying earnings in the relevant pay reference period (assessment) are 1, This is above the monthly earnings trigger for automatic enrolment and so Neeta is an eligible jobholder on the assessment date. AJD Ltd knows that they must automatically enrol Neeta from her automatic enrolment date of 14 May. The scheme that AJD Ltd are using for automatic enrolment is a minimum requirement pension scheme with an employer and jobholder contribution rate of 1% and which provides for all three definitions of pay reference period. AJD Ltd is using the definition of a pay reference period (contribution entitlement) aligned to tax weeks or months. Neeta s automatic enrolment date is 14 May. This falls within the pay reference period (contribution entitlement) of 6 May to 5 June. The next whole pay reference period (contribution entitlement) which starts on or after 14 May is the pay reference period (contribution entitlement) of 6 June to 5 July. This is the first relevant pay reference period (contribution entitlement) for Neeta. continued... A detailed guide to Automatic enrolment for software developers 96

97 Pay reference period (assessment) Assessment date 22nd birthday 14/5 Pay date 31/5 6/5 6/6 6/7 6/8 Relevant PRP (assessment) 6/10-5/11 Pay reference period (contribution entitlement) Automatic enrolment date (date both a jobholder and an active member of a qualifying pension scheme) 14/5 Pay date 31/5 ( 1,000) Pay date 30/6 ( 900) 6/5 6/6 6/7 6/8 First relevant PRP (contribution entitlement) 6/6-5/7 The contribution rule under the scheme rules or governing documentation is for a jobholder contribution of 1% of the amount of Neeta s qualifying earnings in the period 6 June to 5 July. The amount of qualifying earnings in this period is the amount of the qualifying earnings on 30 June. This is 900 and so the contribution payable to the scheme (and to be deducted from Neeta s qualifying earnings) is 1% of ( ) = The contribution rule under the scheme rules or governing documentation is for an employer contribution of 1% of the amount of Neeta s qualifying earnings in the period 6 June to 5 July, also No contributions are due under the scheme rules for the period 14 May to 5 June and so no deduction is required from the qualifying earnings on 31 May. A detailed guide to Automatic enrolment for software developers 97

98 286. In all the examples above the employer has chosen to use the definition of pay reference period (assessment) aligned to tax weeks or months and so match the definition of pay reference period (contribution entitlement). In the example below the employer is using the definition of pay reference period (assessment) aligned to the period by reference to which the worker is paid their regular wage or salary. Example 8 XYZ Ltd have chosen to use the definition of pay reference period (assessment) aligned to the period by reference to which the worker is paid their regular wage or salary. They have identified that the pay reference period (assessment) is a calendar month pay reference period (assessment) starting on the first calendar day of the month. Annie started employment with XYZ Ltd on 16 May and her employer applied postponement. Her deferral date is 1 August. This is the start of the August pay reference period (assessment) that runs from 1 August to 31 August. Pay reference period (assessment) Deferral date 1/8 Pay date 28/8 1/8 1/9 1/10 Assessment date Relevant PRP (assessment) 1/8-31/8 XYZ Ltd know that the next step is to identify whether qualifying earnings are payable in the relevant pay reference period (assessment) and whether qualifying earnings are payable above the earnings trigger for automatic enrolment. In the payroll run for the pay date of 28 August XYZ Ltd identifies that the qualifying earnings in the relevant pay reference period (assessment) are 1, continued... A detailed guide to Automatic enrolment for software developers 98

99 This is above the monthly earnings trigger for automatic enrolment and so Annie is an eligible jobholder on the deferral date. XYZ Ltd knows that they must automatically enrol Annie from her automatic enrolment date of 1 August. The scheme that XYZ Ltd are using for automatic enrolment is a minimum requirement scheme pension scheme which provides for all three definitions of pay reference period. The contribution rates are 1% for employer and jobholder contributions. XYZ Ltd is using the definition of a pay reference period (contribution entitlement) aligned to tax weeks or months. The usual interval between payments of Annie s regular wage or salary is one month. Annie s automatic enrolment date is 1 August. This falls within the pay reference period (contribution entitlement) of 6 July to 5 August. The next whole pay reference period (contribution entitlement) which starts on or after 1 August is the pay reference period (contribution entitlement) of 6 August to 5 September. This is the first relevant pay reference period (contribution entitlement) for Annie. Pay reference period (assessment) Assessment date Deferral date 1/8 Pay date 28/8 1/8 1/9 1/10 Relevant PRP (assessment) 1/8-31/8 Pay reference period (contribution entitlement) continued... Automatic enrolment date (date both a jobholder and an active member of a qualifying pension scheme) 1/8 Pay date 28/8 ( 1,200) Pay date 28/9 ( 1,500) 6/8 6/9 6/10 First relevant PRP (contribution entitlement) 6/8-5/9 A detailed guide to Automatic enrolment for software developers 99

100 1/8 1/9 1/ Specification of core payroll-driven calculation routines Relevant PRP (assessment) 1/8-31/8 Pay reference period (contribution entitlement) Automatic enrolment date (date both a jobholder and an active member of a qualifying pension scheme) 1/8 Pay date 28/8 ( 1,200) Pay date 28/9 ( 1,500) 6/8 6/9 6/10 First relevant PRP (contribution entitlement) 6/8-5/9 The contribution rule under the scheme rules or governing documentation is for a jobholder contribution of 1% of the amount of Annie s qualifying earnings in the period 6 August to 5 September. The amount of qualifying earnings in this period is the amount of the qualifying earnings on 28 August. This is 1,200 and so the contribution payable to the scheme (and to be deducted from Annie s qualifying earnings) is 1% of ( 1, ) = The contribution rule under the scheme rules or governing documentation is for an employer contribution of 1% of the amount of Annie s qualifying earnings in the period 6 August to 5 September, also Definition of a pay reference period aligned to tax week or months at the change in the tax year 287. Where the usual interval between payments of a worker s regular wage or salary is a week or a multiple of a week (and in some cases a multiple of months) there are overlapping pay reference periods (contribution entitlement) around the 6 April each year. In most circumstances however, the last pay reference period (contribution entitlement) is ended early on 5 April to avoid this overlap. This is exactly the same as for the corresponding definition of a pay reference period (assessment) as described in paragraphs 154 to Where the last pay reference period (contribution entitlement) of the tax year is ended on 5 April it is as a result of qualifying earnings not being payable during this period. As a result the pension contribution due during this period will be nil. A detailed guide to Automatic enrolment for software developers 100

101 Section reminder header/previous paragraph continued... Relevant pay reference periods (contribution entitlement) across the tax year change (where the definition of a pay reference period is aligned to tax weeks or months) Qualifying earnings for the pay reference period (contribution entitlement) 5/4 to 2/5 (not a leap year) are payable on 10 April therefore this pay reference period (contribution entitlement) is ended on 5 April and so becomes: Qualifying earnings are payable on this date 10 April 5/4 5/4 6/4 3/5 Contribution rule for a minimum requirement pension scheme is 1% of the amount of qualifying earnings in the period 5/4 to 5/4 Contribution rule for a minimum requirement pension scheme is 1% of the amount of qualifying earnings in the period 6/4 to 3/ If a worker becomes a jobholder and active member of a qualifying scheme in this shortened last pay reference period (contribution entitlement) (eg through contractual enrolment) then the application of the minimum contribution entitlement under this definition of pay reference period (contribution entitlement) is as for any new joiner. If the day that the worker is both a jobholder and an active member of a qualifying scheme is 5 April, the first whole pay reference period (contribution entitlement) is 5 April to 5 April. No contributions are due in this period as there are no qualifying earnings Similarly if automatic enrolment or re-enrolment is triggered (or active membership is established for a jobholder through contractual enrolment) in the pay reference period (contribution entitlement) before the last pay reference period (contribution entitlement) of the tax year, then the application of the minimum contribution entitlement under this definition of pay reference period (contribution entitlement) is as for any new joiner (see example below). A detailed guide to Automatic enrolment for software developers 101

102 Example 9 The usual interval between payments of Fran s regular wage or salary is four-weekly. Fran is 48 years old and her salary is above the earnings trigger for automatic enrolment. Her employer is using the definition of a pay reference period (assessment) aligned to tax weeks or months. They are also using a minimum requirement pension scheme for their employer duties and under the scheme have chosen the definition of a pay reference period (contribution entitlement) aligned to tax weeks or months. The contribution rate is a 1% contribution for both the employer and jobholder. Fran became an active member of a qualifying scheme on her first day of her employment (29 March) as a result of contractual enrolment. 29 March therefore is the first day that Fran is both a jobholder and an active member of a qualifying scheme. 29 March falls within the pay reference period (contribution entitlement) of 8 March to 4 April). The first day of the next pay reference period is 5 April. The pay reference period (contribution entitlement) starting on 5 April is the first whole pay reference period (contribution entitlement) which falls on or after 29 March. The first relevant pay reference period (contribution entitlement) for Fran starts on 5 April and will either end on 5 April or 2 May depending upon the date the qualifying earnings for that pay reference period (contribution entitlement) are payable (see paragraphs 287 to 293 for more information). If, in that last pay reference period (contribution entitlement) of the tax year the qualifying earnings that are payable in that pay reference period (contribution entitlement) are paid or payable on or after 6 April, the pay reference period (contribution entitlement) is ended on 5 April. The qualifying earnings for that last pay reference period (contribution entitlement) of the tax year are payable on 30 April and therefore the pay reference period (contribution entitlement) is ended on 5 April. The first relevant pay reference period (contribution entitlement) for Fran is 5 April to 5 April. continued... A detailed guide to Automatic enrolment for software developers 102

103 Section reminder header/previous paragraph continued... Pay reference period (assessment) Date both a jobholder and an active member of a qualifying pension scheme 29/3 Pay date 31/3 Pay date 30/4 8/3 5/4 6/4 4/5 Pay reference period (contribution entitlement) Date both a jobholder and an active member of a qualifying pension scheme 29/3 Pay date 31/3 Pay date 30/4 8/3 5/4 6/4 4/5 First relevant PRP (contribution entitlement) 5/4-5/4 As a minimum requirement pension scheme the contribution rule under the scheme rules or governing documentation is for a jobholder contribution of 1% of the amount of Fran s qualifying earnings in the period 5 April to 5 April. There are no qualifying earnings in this period therefore a nil contribution is due. The next relevant pay reference period (contribution entitlement) is the period of 6 April to 3 May. The amount of qualifying earnings in this period is the amount of the qualifying earnings on 30 April. This is 650 and so the contribution payable to the scheme (and to be deducted from Fran s qualifying earnings on 30 April) is 1% of ( ) = The contribution rule under the scheme rules or governing documentation is for an employer contribution of 1% of the amount of Fran s qualifying earnings in the period 6 April to 3 May, also continued... A detailed guide to Automatic enrolment for software developers 103

104 No contributions are due under the scheme rules for the period 29 March to 4 April and no deduction is required from the qualifying earnings on 31 March Where the last pay reference period (contribution entitlement) of a tax year is not ended on 5 April it runs alongside the first pay reference period (contribution entitlement) in the next tax year. In this case contributions will be due for both pay reference periods (contribution entitlement). Qualifying earnings are payable on this date (5 April) 4/4 Last PRP (contribution 1/5 entitlement) of 2015/16 Qualifying earnings are payable on this date (3 May) 6/4 First PRP (contributions 3/5 entitlement) of 2016/17 Qualifying earnings for the pay reference period (contribution entitlement) 4/4 to 1/5 are payable on 5 April therefore this pay reference period contribution entitlement) runs alongside the pay reference period of 6/4 to 3/5 as above In this example, the contribution rule for a minimum requirement pension scheme will be a jobholder contribution of x% (eg 1%) of the amount of the jobholder s qualifying earnings in the period 4 April to 1 May (and an employer contribution of x% (eg 1%) of the amount of the jobholder s qualifying earnings in the period 4 April to 1 May). The amount of the qualifying earnings in the period 4 April to 1 May will be those qualifying earnings payable on 5 April. A detailed guide to Automatic enrolment for software developers 104

105 293. In addition the contribution rule for a minimum requirement pension scheme will be a jobholder contribution of x% (eg 1%) of the amount of the jobholder s qualifying earnings in the period 6 April to 3 May (and an employer contribution of x% (eg 1%) of the amount of the jobholder s qualifying earnings in the period 6 April to 3 May). The amount of the qualifying earnings in the period 6 April to 3 May will be those qualifying earnings on 3 May. Definition of pay reference period (contribution entitlement) aligned with the period by reference to which the jobholder is paid their regular wage or salary 294. Under this definition the pay reference period (contribution entitlement) is a period equal in length to the period by reference to which the jobholder is paid their regular wage or salary, commencing on the first day of that period This is broadly similar to the definition of pay reference period (assessment) aligned to the period by reference to which the worker is paid their regular wage or salary. However there is a difference as the length of the pay reference period (assessment) is defined as: a. in the case of a person who is paid their regular wage or salary by reference to a period of a week, the period of one week, or b. in the case of a person who is paid their regular wage or salary by reference to a period longer than a week, that period The effect of this difference is minimal. It means that jobholders who are paid their regular wage or salary by reference to a period of less than a week will have a pay reference period (contribution entitlement) equal to this length. However, under the corresponding definition of a pay reference period (assessment) such jobholders do not have a pay reference period (assessment) The pay reference period starts on the first day of the period by reference to which the worker is paid their regular wage or salary. If the definition of pay reference period (contribution entitlement) is being changed to one of the other options, a pay reference period (contribution entitlement) ends the day before the start of the first pay reference period (contribution entitlement) under the new definition. More information on switching from one definition to another can be found at paragraphs 308 to The legislative requirement means that entitlement to contributions is in a specific pay reference period (contribution entitlement) the relevant pay reference period (contribution entitlement). A detailed guide to Automatic enrolment for software developers 105

106 299. The first relevant pay reference period (contribution entitlement) is the first whole pay reference period (contribution entitlement) that starts on or after the date that the worker becomes both a jobholder and an active member of a qualifying scheme for the first time. Active membership may be as a result of automatic enrolment, re-enrolment or enrolment (opt in). In this case the first day that the worker is both a jobholder and an active member of a qualifying scheme will be the automatic enrolment date, reenrolment date or enrolment date (opt in) Or, active membership may be as a result of the employer using contractual enrolment or the worker may already be an active member on the employer s staging date having previously joined the scheme prior to the staging date. In this latter case the first day that the worker is both a jobholder and an active member of a qualifying scheme will be the first day that they are a jobholder after active membership has started or after the employer s staging date. Examples Piers employer has identified that the period by reference to which he is paid his regular wage or salary is a four week period that starts on a Tuesday. Piers automatic enrolment date is 22 January This falls within the pay reference period (contribution entitlement) of 6 January to 2 February The first day of the next pay reference period is 3 February. The pay reference period (contribution entitlement) starting on 3 February is the first whole pay reference period which falls on or after 22 January. The first relevant pay reference period (contribution entitlement) for Piers is 3 February to 2 March. What it means for a minimum requirement pension scheme No contribution is payable under the scheme rules or governing documentation for the period 22 January to 2 February. Contribution rule under the scheme rules is a an employer contribution of x% (eg 1%) of the amount of Piers qualifying earnings in the period 3 February to 2 March, and a jobholder contribution of x% (eg 1%) of the amount of Piers qualifying earnings in the period 3 February to 2 March, and so on for each relevant pay reference period (contribution entitlement) until the last relevant pay reference period (contribution entitlement). continued... A detailed guide to Automatic enrolment for software developers 106

107 Examples Heather s employer has identified that the period by reference to which she is paid her regular wage or salary is a month which starts on the first calendar day of the month. The employer s staging date is 1 December 2014 and on this date Heather was both a jobholder and an active member of a qualifying scheme with her employer (having joined the scheme some time before the staging date) 1 December 2014 is the first day of the pay reference period (contribution entitlement) of 1 December 2014 to 31 December As this pay reference period (contribution entitlement) is the first whole pay reference period (contribution entitlement) which starts on or after the 1 December the first relevant pay reference period (contribution entitlement) for Heather is 1 December to 31 December. Charlie s employer has identified that the period by reference to which he is paid his regular wage or salary is a week that starts on a Saturday. Charlie s 22nd birthday is 6 June 2014 and on this date he meets the criteria to be an eligible jobholder. His employer has decided not to use postponement and so 6 June 2014 is Charlie s automatic enrolment date. This falls within the pay reference period (contribution entitlement) of 31 May to 6 June. The first day of the next pay reference period (contribution entitlement) is 7 June. The pay reference period (contribution entitlement) starting on 7 June is the first whole pay reference period (contribution entitlement) which falls on or after 6 June. The first relevant pay reference period (contribution entitlement) for Charlie is 7 June to 13 June. What it means for a minimum requirement pension scheme Contribution rule under the scheme rules is an employer contribution of x% (eg 1%) of the amount of Heather s qualifying earnings in the period 1 December to 31 December, and a jobholder contribution of x% (eg 1%) of the amount of Heather s qualifying earnings in the period 1 December to 31 December, and so on for each relevant pay reference period (contribution entitlement) until the last relevant pay reference period (contribution entitlement). No contribution is payable under the scheme rules or governing documentation for the period 6 June to 6 June. Contribution rule under the scheme rules is an employer contribution of x% (eg 1%) of the amount of Charlie s qualifying earnings in the period 7 June to 13 June, and a jobholder contribution of x% (eg 1%) of the amount of Charlie s qualifying earnings in the period 7 June to 13 June, and so on for each relevant pay reference period (contribution entitlement) until the last relevant pay reference period (contribution entitlement). A detailed guide to Automatic enrolment for software developers 107

108 301. In our view each pay reference period (contribution entitlement) between the first relevant pay reference period (contribution entitlement) and the last pay reference period (contribution entitlement) is a relevant pay reference period (contribution entitlement) The last relevant pay reference period (contribution entitlement) is the pay reference period (contribution entitlement) in which the worker ceases to be a jobholder, or in which active membership of the qualifying scheme ceases. Active membership of a qualifying scheme could be because the worker leaves employment, opts out or ceases membership of the pension scheme voluntarily or it could be because the scheme ceases to be a qualifying scheme. Examples Piers employer has identified that the period by reference to which he is paid his regular wage or salary is a four week period that starts on a Tuesday. Piers automatic enrolment date was 22 January Piers decides to opt out of the scheme on 20 February This falls within the pay reference period (contribution entitlement) of 3 February to 2 March. This pay reference period (contribution entitlement) is therefore the last relevant pay reference period (contribution entitlement) for Piers. Heather s employer has identified that the period by reference to which she is paid her regular wage or salary is a month which starts on the first calendar day of the month. The employer s staging date is 1 December 2014 and on this date Heather was both a jobholder and an active member of a qualifying scheme with her employer. Heather decides to cease active membership under the scheme rules on 17 November This falls within the pay reference period (contribution entitlement) of 1 November to 30 November This pay reference period (contribution entitlement) is therefore the last relevant pay reference period (contribution entitlement) for Heather. What it means for a minimum requirement pension scheme Contribution rule under the scheme rules is an employer contribution of x% (eg 1%) of the amount of Piers qualifying earnings in the period 3 February to 2 March, and a jobholder contribution of x% (eg 1%) equal to or more than the amount of Piers qualifying earnings in the period 3 February to 2 March. No contribution is payable under the scheme rules or governing documentation after 2 March, unless Piers is enrolled (opt in) or automatically enrolled into the same scheme. Contribution rule under the scheme rules is an employer contribution of x% (eg 1%) of the amount of Heather s qualifying earnings in the period 1 November to 30 November, and a jobholder contribution of x% (eg 1%) of the amount of Heather s qualifying earnings in the period 1 November to 30 November. No contribution is payable under the scheme rules or governing documentation after 30 November 2015, unless Heather is enrolled (opt in) or automatically re-enrolled into the same scheme. continued... A detailed guide to Automatic enrolment for software developers 108

109 Section reminder header/previous paragraph continued... Examples Charlie s employer has identified that the period by reference to which he is paid his regular wage or salary is a week that starts on a Saturday. Charlie s automatic enrolment date is 6 June Charlie leaves employment on 15 August This falls within the pay reference period (contribution entitlement) 9 August 2014 to 15 August This pay reference period (contribution entitlement) is therefore the last relevant pay reference period (contribution entitlement) for Charlie. What it means for a minimum requirement pension scheme Contribution rule under the scheme rules is an employer contribution of x% (eg 1%) of the amount of Charlie s qualifying earnings in the period 9 August 2014 to 15 August 2014, and a jobholder contribution of x% (eg 1%) of the amount of Charlie s qualifying earnings in the period 9 August 2014 to 15 August No contribution is payable under the scheme rules or governing documentation after 15 August 2014, unless Charlie is enrolled (opt in) or automatically re-enrolled into the same scheme Just as described at paragraphs 279 to 281 under the definition of a pay reference period (contribution entitlement) aligned to tax weeks or months, where the date the worker is a jobholder and an active member is part way through a pay reference period (contribution entitlement) and the worker opts out or voluntarily ceases active membership under the scheme rules in the same pay reference period (contribution entitlement) the entitlement due under the scheme for that pay reference period (contribution entitlement) is changed. What this means in practice 304. The effect of having a defined first and last relevant pay reference period (contribution entitlement) is that there is no requirement for pro rata contribution calculations for a minimum requirement scheme (see example below). This is true even where active membership for a jobholder starts part way through a pay reference period (contribution entitlement). A detailed guide to Automatic enrolment for software developers 109

110 Example 10 AJD Ltd s staging date is 1 August They have chosen to use the definition of pay reference period (assessment) aligned to the period by reference to which their worker is paid their regular wage or salary. They have identified that the usual pay reference period (assessment) is monthly starting on the first calendar day of the month. They have also chosen to use postponement and have postponed all of their workers until 1 October. They used general notice A as their postponement notice. One of their workers is Simone. Simone is 33 years old. AJD Ltd know that the deferral day is an assessment date and so identify that the relevant pay reference period (assessment) for Simone is 1 October to 31 October. Pay reference period (assessment) Deferral date 1/10 Pay date 31/10 1/10 1/11 1/12 Relevant PRP (assessment) 1/10-31/10 Assessment date AJD Ltd know that the next step is to identify whether qualifying earnings are payable in the relevant pay reference period (assessment) and whether qualifying earnings are payable above the earnings trigger for automatic enrolment. In the payroll run for the pay date of 31 October AJD Ltd identifies that the qualifying earnings in the relevant pay reference period (assessment) are This is above the monthly earnings trigger for automatic enrolment and so Simone is an eligible jobholder on the deferral date. AJD Ltd knows that they must automatically enrol Simone from her automatic enrolment date of 1 October. continued... A detailed guide to Automatic enrolment for software developers 110

111 The scheme that AJD Ltd are using for automatic enrolment is a minimum requirement pension scheme with an employer and jobholder contribution rate of 1% and which provides for all three definitions of pay reference period. AJD Ltd is using the definition of a pay reference period (contribution entitlement) aligned to the period by reference to which the worker is paid. Simone s automatic enrolment date is 1 October. This falls within the pay reference period (contribution entitlement) of 1 October to 31 October. As this pay reference period is the first whole pay reference period (contribution entitlement) which starts on or after 1 October the first relevant pay reference period (contribution entitlement) for Simone is 1 October to 31 October. Pay reference period (assessment) Assessment date Deferral date 1/10 Pay date 31/10 1/10 1/11 1/12 1/1 Relevant PRP (assessment) 1/10-31/10 Pay reference period (contribution entitlement) Automatic enrolment date (date both a jobholder and an active member of a qualifying pension scheme) 6/10 Pay date 31/10 ( ) 1/10 1/11 1/12 1/1 First relevant PRP (contribution entitlement) 1/10-31/10 continued... A detailed guide to Automatic enrolment for software developers 111

112 The contribution rule under the scheme rules or governing documentation is for a jobholder contribution of 1% of the amount of Simon s qualifying earnings in the period 1 October to 31 October. The amount of qualifying earnings in this period is the amount of the qualifying earnings on 31 October. This is and so the contribution payable to the scheme (and to be deducted from Simone s qualifying earnings) is 1% of ( ) = The contribution rule under the scheme rules or governing documentation is for an employer contribution of 1% of the amount of Simone s qualifying earnings in the period 1 October to 31 October, also Simone does not opt out so in the next relevant pay reference period (contribution entitlement) the contribution rule under the scheme rules or governing documentation is for a jobholder contribution of 1% of the amount of Simone s qualifying earnings in the period 1 November to 30 November. Pay reference period (assessment) 1/10 1/11 1/12 1/1 Pay reference period (contribution entitlement) Active membership started 1/10 Pay date 30/11 ( ) 1/10 1/11 1/12 1/1 Relevant PRP (contribution entitlement) 1/11-30/11 The amount of qualifying earnings in this period is the amount of the qualifying earnings on 30 November. This is and so the contribution payable to the scheme (and to be deducted from Simone s qualifying earnings) is 1% of ( ) = (The employer contribution under the rules is also 1.23) continued... A detailed guide to Automatic enrolment for software developers 112

113 Simone decides to cease active membership of the pension scheme and active membership ceases under the scheme rules on 12 December. This falls within the pay reference period (contribution entitlement) of 1 December to 31 December. As this is the pay reference period (contribution entitlement) in which active membership of a qualifying scheme ceases, the last relevant pay reference period (contribution entitlement) is 1 December to 31 December. Pay reference period (assessment) Date after active membership ceased 13/12 1/10 1/11 1/12 1/1 This would be an assessment date but the employer used postponement and general notice A so has discharged all of their information duties. Automatic enrolment has been discharged too. The next employer duty for AJD Ltd for Simone is at the cyclical re-enrolment date if Simone is an eligible jobholder on that date. Pay reference period (contribution entitlement) Active membership started 1/10 Active membership ceased 12/12 Pay date 31/12 ( ) 1/10 1/11 1/12 1/1 Last relevant PRP (contribution entitlement) 1/12-31/12 continued... A detailed guide to Automatic enrolment for software developers 113

114 Section reminder header/previous paragraph continued... The contribution rule under the scheme rules or governing documentation is for a jobholder contribution of 1% of the amount of Simone s qualifying earnings in the last relevant pay reference period (contribution entitlement) of 1 December to 31 December. The amount of qualifying earnings in this period is the amount of the qualifying earnings on 30 December. This is and so the contribution payable to the scheme (and to be deducted from Simone s qualifying earnings) is 1% of ( ) = The contribution rule under the scheme rules or governing documentation is for an employer contribution of 1% of the amount of Simone s qualifying earnings in the period 1 December to 31 December, also In the example above 1% of the amount of qualifying earnings in the first relevant pay reference period (contribution entitlement) equals If 4.29 were deducted from Simone s qualifying earnings this would be less than that required by the pension scheme rules or governing documentation. Therefore the contribution is rounded up to the nearest penny As before with the definition of pay reference period (contribution entitlement) aligned to tax weeks or months the point to note is that the requirement under the rules is 1% of the amount of qualifying earnings in the relevant pay reference period; it is not 1% of the amount of qualifying earnings earned in the relevant pay reference period. This is relevant when it comes to arrears payrolls In the example above the employer has chosen to use the definition of pay reference period (assessment) aligned to the period by reference to which the worker is paid their regular wage or salary and match the definition of pay reference period (contribution entitlement). In the example below the employer is using the definition of pay reference period (assessment) aligned to tax weeks or months. A detailed guide to Automatic enrolment for software developers 114

115 Example 11 XYZ Ltd have chosen to use the definition of pay reference period (assessment) aligned to tax weeks or months They have identified that the usual interval between payments for their worker s regular wage or salary is monthly. The pay reference period (assessment) is therefore one month in length and starts on the first day of the tax month. Annie started employment with XYZ Ltd on 16 May and her employer applied postponement. Her deferral date is 6 August. This is the start of the August pay reference period (assessment) that runs from 6 August to 5 September. Pay reference period (assessment) Deferral date 6/8 Pay date 28/8 6/8 6/9 6/10 Assessment date Relevant PRP (assessment) 6/8-5/9 XYZ Ltd know that the next step is to identify whether qualifying earnings are payable in the relevant pay reference period (assessment) and whether qualifying earnings are payable above the earnings trigger for automatic enrolment. In the payroll run for the pay date of 28 August XYZ Ltd identifies that the qualifying earnings in the relevant pay reference period are 1, This is above the monthly earnings trigger for automatic enrolment and so Annie is an eligible jobholder on the deferral date. XYZ Ltd knows that they must automatically enrol Annie from her automatic enrolment date of 6 August. continued... A detailed guide to Automatic enrolment for software developers 115

116 The scheme that XYZ Ltd is using for automatic enrolment is a minimum requirement scheme which provides for all three definitions of pay reference period (contribution entitlement). The contribution rates are 1% for employer and jobholder contributions. XYZ Ltd is using the definition of a pay reference period (contribution entitlement) aligned to the period by reference to which the worker is paid. They have identified that the period by reference to which they Annie is paid is a calendar month starting on the 15th day of each month. Annie s automatic enrolment date is 6 August. This falls within the pay reference period (contribution entitlement) of 15 July to 14 August. The next whole pay reference period (contribution entitlement) which starts on or after 6 August is the pay reference period (contribution entitlement) of 15 August to 14 September. This is the first relevant pay reference period (contribution entitlement) for Annie. Pay reference period (assessment) Assessment date Deferral date 6/8 Pay date 28/8 6/8 6/9 6/10 Relevant PRP (assessment) 6/8-5/9 Pay reference period (contribution entitlement) Automatic enrolment date (date both a jobholder and an active member of a qualifying pension scheme) 6/8 Pay date 28/8 ( 1,200) Pay date 28/9 ( 1,500) 15/8 15/9 15/10 First relevant PRP (contribution entitlement) 15/8-14/9 continued... A detailed guide to Automatic enrolment for software developers 116

117 The contribution rule under the scheme rules or governing documentation is for a jobholder contribution of 1% of the amount of Annie s qualifying earnings in the period 15 August to 14 September. The amount of qualifying earnings in this period is the amount of the qualifying earnings on 28 August. This is 1,200 and so the contribution payable to the scheme (and to be deducted from Annie s qualifying earnings) is 1% of ( 1, ) = The contribution rule under the scheme rules or governing documentation is for an employer contribution of 1% of the amount of Annie s qualifying earnings in the period 15 August to 14 September, also Changing from one definition of a pay reference period (contribution entitlement) to another 308. An employer with a staging date before 1 November 2013 who is using a minimum requirement pension scheme for their employer duties will have been using the definition of a pay reference period (contribution entitlement) that is a 12 month period (or shorter). From the 1 November 2013 that employer can choose to change to using the definition of a pay reference period (contribution entitlement) aligned with tax weeks or months or the definition of a pay reference period (contribution entitlement) aligned to the period by reference to which they pay their worker their regular wage or salary This is only relevant where the pension scheme is a minimum requirement pension scheme and provides for the different definitions of pay reference period (contribution entitlement) If an employer determines to change from using one definition of a pay reference period (contribution entitlement) then, unlike in the case of the assessment process, there are no overlapping pay reference periods (contribution entitlement) at the time of the change. This is because under the legislation the old pay reference period (contribution entitlement) is ended the day before the start of the first pay reference period (contribution entitlement) under the new definition. A detailed guide to Automatic enrolment for software developers 117

118 Examples 12a and 12b use the same facts. In example 12a the definition of a pay reference period is aligned to the period by reference to which the worker is paid their regular wage or salary. In example 12b the definition of a pay reference period is aligned to tax weeks or months. Example 12a Where the new definition of pay reference period (contribution entitlement) is aligned to tax weeks or months Employer B has decided to change from using the definition of pay reference period (contribution entitlement) that is 12 months (or shorter) to using the definition aligned to tax weeks or months from July Their staging date was 1 February The usual interval between payments of their workers regular wage or salary is monthly and so under the new definition of a pay reference period (contribution entitlement) the length of the pay reference period (contribution entitlement) is one month and it starts on the first day of the tax month. Worker A was automatically enrolled from 1 February. They have remained in active membership of the minimum requirement pension scheme with a 1% contribution rate for both jobholder and employer. Their first pay reference period (contribution entitlement) was 1 February 2013 to 31 January This means that under the scheme the contribution that was due was 1% of the amount of Worker A s qualifying earnings in the period 1 February to 31 January (for both jobholder and employer contribution). The next pay reference period (contribution entitlement) started on 1 February and is for a 12 month period. As the employer has decided to switch to the definition of a pay reference period (contribution entitlement) aligned to tax weeks or months from July 2014, this 12 month period is ended on 5 July. This means that under the scheme the contribution that was due was 1% of the amount of Worker A s qualifying earnings in the period 1 February to 5 July (for both jobholder and employer contribution). continued... A detailed guide to Automatic enrolment for software developers 118

119 The next pay reference period (contribution entitlement) is 6 July to 5 August. This means that under the scheme the contribution that is due is 1% of the amount of Worker A s qualifying earnings in the period 6 July 2014 to 5 August (for both jobholder and employer contribution) and so on until the last relevant pay reference period (contribution entitlement). Worker A Last PRP (contribution entitlement) under definition of 12 months (or shorter) First PRP (contribution entitlement) under definition aligned to tax weeks or months 1/2 5/7 6/7 5/8 For a minimum requirement For a minimum pension scheme, this means requirement pension a contribution rule of x% (eg scheme, this means a 1%) of the amount of the contribution rule of x% Worker A s qualifying earnings (eg 1%) of the amount in the period 1 February of the Worker A s 2014 to 5 July for both the qualifying earnings in jobholder and employer the period 6 July to 5 contribution August for both the jobholder and employer contribution Worker B was automatically enrolled from 13 May They have remained in active membership of the minimum requirement pension scheme. Their first pay reference period (contribution entitlement) was 13 May 2014 to 5 July 2014 (as the employer has decided to switch to the definition of a pay reference period (contribution entitlement) aligned to the period by reference to which the worker is paid their regular wage or salary from July 2014). This means that under the scheme the contribution that was due was 1% of the amount of Worker B s qualifying earnings in the period 13 May 2014 to 5 July 2014 (for both jobholder and employer contribution). The next pay reference period (contribution entitlement) is 6 July to 5 August. This means that under the scheme the contribution that is due is 1% of the amount of Worker B s qualifying earnings in the period 6 July 2014 to 5 August (for both jobholder and employer contribution) and so on until the last relevant pay reference period (contribution entitlement). continued... A detailed guide to Automatic enrolment for software developers 119

120 Worker B Last PRP (contribution entitlement) under definition of 12 months (or shorter) First PRP (contribution entitlement) under definition aligned to tax weeks or months 13/5 5/7 6/7 5/8 For a minimum requirement pension scheme, this means a contribution rule of x% (eg 1%) of the amount of the Worker A s qualifying earnings in the period 13 May 2014 to 5 July for both the jobholder and employer contribution For a minimum requirement pension scheme, this means a contribution rule of x% (eg 1%) of the amount of the Worker A s qualifying earnings in the period 6 July to 5 August for both the jobholder and employer contribution Example 12b Where the new definition of pay reference period (contribution entitlement) is aligned to the period by reference to which the worker is paid their regular wage or salary Employer B has decided to change from using the definition of pay reference period (contribution entitlement) that is 12 months (or shorter) to using the definition aligned to the period by reference to which their worker is paid their regular wage or salary from July Their staging date was 1 February They have identified that their pay reference period (contribution entitlement) is a month in length and starts on the first calendar day of each month. Worker A was automatically enrolled from 1 February. They have remained in active membership of the minimum requirement pension scheme. Their first pay reference period (contribution entitlement) was 1 February 2013 to 31 January This means that under the scheme the contribution that was due was 1% of the amount of Worker A s qualifying earnings in the period 1 February to 31 January (for both jobholder and employer contribution). The next pay reference period (contribution entitlement) started on 1 February 2014 and is for a 12 month period. continued... A detailed guide to Automatic enrolment for software developers 120

121 As the employer has decided to switch to the definition of a pay reference period (contribution entitlement) aligned to the period by reference to which their worker is paid their regular wage or salary from July 2014, this 12 month period is ended on 30 June. This means that under the scheme the contribution that was due was 1% of the amount of Worker A s qualifying earnings in the period 1 February to 30 June (for both jobholder and employer contribution). The next pay reference period (contribution entitlement) is 1 July to 31 July. This means that under the scheme the contribution that is due is 1% of the amount of Worker A s qualifying earnings in the period 1 July to 31 July (for both jobholder and employer contribution) and so on until the last relevant pay reference period (contribution entitlement). Worker A Last PRP (contribution entitlement) under definition of 12 months (or shorter) First PRP (contribution entitlement) under definition aligned the period by reference to which the worker is paid their regular wage or salary 1/2 30/6 1/7 31/7 For a minimum requirement pension scheme, this means a contribution rule of x% (eg 1%) of the amount of the Worker A s qualifying earnings in the period 1 February 2014 to 30 June for both the jobholder and employer contribution For a minimum requirement pension scheme, this means a contribution rule of x% (eg 1%) of the amount of the Worker A s qualifying earnings in the period 1 July to 31 July for both the jobholder and employer contribution Worker B was automatically enrolled from 13 May They have remained in active membership of the minimum requirement pension scheme. Their first pay reference period (contribution entitlement) was 13 May 2014 to 30 June 2014 (as the employer has decided to switch to the definition of a pay reference period (contribution entitlement) aligned to the period by reference to which the worker is paid their regular wage or salary from July 2014). This means that under the scheme the contribution that was due was 1% of the amount of Worker B s qualifying earnings in the period 13 May 2014 to 30 June 2014 (for both jobholder and employer contribution). continued... A detailed guide to Automatic enrolment for software developers 121

122 The next pay reference period (contribution entitlement) is 1 July to 31 July. This means that under the scheme the contribution that is due is 1% of the amount of Worker B s qualifying earnings in the period 1 July to 31 July (for both jobholder and employer contribution) and so on until the last relevant pay reference period (contribution entitlement). Worker B Last PRP (contribution entitlement) under definition of 12 months (or shorter) First PRP (contribution entitlement) under definition aligned the period by reference to which the worker is paid their regular wage or salary 13/5 30/6 1/7 31/7 For a minimum requirement pension scheme, this means a contribution rule of x% (eg 1%) of the amount of the Worker A s qualifying earnings in the period 13 May 2014 to 30 June for both the jobholder and employer contribution For a minimum requirement pension scheme, this means a contribution rule of x% (eg 1%) of the amount of the Worker A s qualifying earnings in the period 1 July to 31 July for both the jobholder and employer contribution 311. Whilst this may be the most likely change in definition (ie from the 12 month definition aligned to an employer s staging date to one of the definitions aligned to tax weeks or months or the period by reference to which the worker is paid their regular wage or salary) it will be possible, if the scheme rules or governing documentation provide for the different definitions, for an employer to change the definition in other ways. For example, changing from a definition aligned to tax weeks or months to a definition aligned to the period by reference to which the worker is paid their regular wage or salary There is nothing that prevents an employer, provided the scheme rules provide for the different definitions, from using one definition of a pay reference period (contribution entitlement) for some workers and another definition of a pay reference period (contribution entitlement) for other workers. A detailed guide to Automatic enrolment for software developers 122

123 Changing both the definition of a pay reference period (assessment) and the definition of a pay reference period (contribution entitlement) at the same time 313. An employer with a staging date before 1 November 2013 will have been using the definition of a pay reference period (assessment) aligned to the period by reference to which a worker is paid their regular wage or salary. From the 1 November 2013 that employer can choose to change to using the definition of a pay reference period (assessment) aligned with tax weeks or months If such an employer is using a minimum requirement pension scheme for their employer duties they will have been using the definition of a pay reference period (contribution entitlement) that is a 12 month (or shorter) period aligned to the employer s staging date. From the 1 November 2013 that employer can also choose (provided the scheme rules or governing documentation provide for the options) to change to using the definition of a pay reference period (contribution entitlement) aligned with tax weeks or months When changing to the definition of a pay reference period (assessment) aligned to tax weeks or months there are overlapping pay reference periods at the time of the change. However, when there is a change in the definition of pay reference period (contribution entitlement), the old pay reference period (contribution entitlement) is ended under the legislation the day before the start of the new pay reference period (contribution entitlement) An employer may wish to consider the practical implications of this difference for a worker who triggers automatic enrolment at the time of the change, if they decide to change the definition of pay reference period for both the purposes of assessment and the minimum contribution requirement at the same time (see example below). A detailed guide to Automatic enrolment for software developers 123

124 Example 13 Employer A has decided to change from using the definition of pay reference period (assessment) aligned to the period by reference to which their worker is paid their regular wage or salary to the definition of pay reference period (assessment) that is aligned to tax weeks or months. They have decided to make the change from April The pension scheme that they are using for their employer duties is a minimum requirement pension scheme which provides for the different definitions of a pay reference period (contribution entitlement). The contribution rates are 2% for both jobholder and employer contributions. Employer A has also decided to change from using the definition of a pay reference period (contribution entitlement) that is a 12 month (or shorter) period aligned to the employer s staging date to using the definition aligned to tax weeks or months also from April The usual interval between payments of their workers regular wage or salary is one month. For one of their workers, Worker C, they also chose to use postponement for the maximum duration of 3 months when she met the criteria to be an eligible jobholder on 1 January. The deferral date for Worker C is 1 April. Her employer knows that the relevant pay reference period (assessment) is the one that runs from 1 April to 30 April under the definition of a pay reference period (assessment) aligned to the period by reference to which the worker is paid their regular wage or salary as this is the one in which the deferral date falls. continued... A detailed guide to Automatic enrolment for software developers 124

125 Last PRP (assessment) under definition aligned to period by reference to which the worker is paid their regular wage or salary Deferral date (1/4) Qualifying earnings are payable on this date (29/4) 1/4 30/4 Assessment date (1/4 deferral date) First PRP (assessment) under definition aligned to tax weeks or months 6/4 5/5 Assessment date (6/4 first day of the pay reference period) In this pay reference period the qualifying earnings payable are those that are due to be paid on 29 April 1, Her employer identifies that this is above the monthly earnings trigger for automatic enrolment ( ) and so Worker C is an eligible jobholder on the deferral date. Employer A must automatically enrol Worker C from the automatic enrolment date of 1 April. In the next pay reference period (assessment) (which is the first under the new definition) of 6 April to 5 May, the assessment date for Worker C is the first day of the pay reference period (assessment) (ie 6 April). In this pay reference period the qualifying earnings payable are those that are due to be paid on 29 April 1, Under the new definition the length of the pay reference period (assessment) is monthly so Employer A compares the amount of qualifying earnings ( ) against the same monthly earnings trigger for automatic enrolment ( 833) and identifies that Worker C is an eligible jobholder on the 6 April. However automatic enrolment was triggered on 1 April and active membership of the automatic enrolment scheme must take effect from this date. On 6 April therefore Worker C is an active member of a qualifying scheme and so automatic enrolment is not triggered. 3 Lower qualifying earnings threshold for (as the assessment date is before 6 April). 4 Earnings trigger for automatic enrolment for (as the assessment date is before 6 April). A detailed guide to Automatic enrolment for software developers 125

126 As the scheme is a minimum requirement pension scheme, the old pay reference period (contribution entitlement) under the definition of a pay reference period (contribution entitlement) that is the 12 month or shorter period aligned to the employer s staging date is ended the day before the start of the first pay reference period (contribution entitlement) under the new definition of pay reference period (contribution entitlement) that is aligned to tax weeks or months. The old pay reference period (contribution entitlement) starts on the date that the worker is an active member and a jobholder for the first time, in this case the automatic enrolment date. Automatic enrolment date (1/4) Qualifying earnings are payable on this date (29/4) 1/4 54 6/4 5/5 Contribution rule is 2% of the amount of Worker C s qualifying earnings in the period 1/4 to 5/4 Contribution rule is 2% of the amount of Worker C s qualifying earnings in the period 6/4 to 5/5 The first contribution rule that applies is 2% of the amount of Worker C s qualifying earnings in the pay reference period 1 April to 5 April. This is a pro rata calculation of the qualifying earnings on 29/4 (ie 5/30 x ( 1, )) x 2%. This is equal to a jobholder and employer contribution of 3.29 The second contribution rule that applies is 2% of the amount of Worker C s qualifying earnings in the pay reference period 6 April to 5 May. The amount of qualifying earnings in this period is the amount of qualifying earnings on 29 April. This is 1, and so the contribution payable to the scheme is The contribution rule under the scheme rules or governing documentation is for an employer contribution of 2% of the amount of Worker C s qualifying earnings in the period 6 April to 5 May, also The amount to be deducted from Worker C s qualifying earnings on 29 April is ( ). 5 Lower qualifying earnings threshold for Lower qualifying earnings threshold for A detailed guide to Automatic enrolment for software developers 126

127 317. What is key to remember is that the relevant pay reference period (contribution entitlement) and the different possible definitions is only applicable where the pension scheme the employer is using is a minimum requirement pension scheme. Even then it remains the case that just like any other pension scheme the rules (or other governing documentation) of a pension scheme will, as now, specify: a. what components of pay the pension contribution is calculated on ( pensionable pay ) b. the rate of contributions to be applied to that pensionable pay c. when the first contribution is due d. when the last contribution is due, and e. the due date for paying those contributions The final point to cover on contributions therefore is the due date for paying the contributions due. The legislative safeguards around these due dates have also been changed from 1 November We describe these below. Time limits for paying contributions 319. The time limits for paying over contributions are amended by the new duties to allow for the opt-out period (where active membership is triggered by automatic enrolment) and the possibility that a worker may opt out of pension saving in this period, or for the jobholder or entitled worker who has asked to join a scheme, to cease active membership immediately after opting in, joining or being contractually enrolled into a qualifying scheme. Software developers should note however, that as above, it will broadly be the rules (or other governing documentation) which will specify the due date for the employer to pay the contributions across, depending upon whether the pension scheme is an occupational or contract based (ie personal pensions scheme) pension scheme Trustees and managers of occupational pension schemes will operate a schedule of payments, as required by law. This schedule is usually agreed with the employer. It will set out the due dates for paying jobholder contributions (if any) and employer contributions to the scheme, and the amount of those contributions. A detailed guide to Automatic enrolment for software developers 127

128 321. There is an additional safeguard in the law for contributions deducted from earnings. Where a person becomes an active member of a qualifying scheme (as a result of automatic enrolment, re-enrolment, enrolment or as a result of contractual enrolment) or where an entitled worker becomes an active member of a nonqualifying scheme after giving the employer a joining notice, this safeguard is modified. Any contributions deducted in the three month period starting from the start date of active membership must be paid across to the scheme by the 22nd day (for electronic payments) or 19th day (for cheque or cash payments) of the month after the last day of that three month period (illustrated below). 1 July. Start date of active membership (eg AE date) 30 September. End of three month period 22 October. (19 October for cheque or cash) July Aug Sept Oct Three month period from start of active membership Any contributions deducted from 1 July to 30 September must be paid across by 22 October (19 October for cheque or cash payment) 322. Any other contributions that have been deducted from pay 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 or cash payments) of the month after deduction It is important to note that in the case of occupational pension schemes, this is not the due date for the payment of contributions, but an extra safeguard for deductions from salary. The due date is the date on the relevant schedule, operated by the scheme trustees or managers, for the payment of contributions both worker contributions deducted from salary and employer contributions The due dates on the relevant schedule for the payment of worker contributions will usually be on or before the 22nd or 19th day after the month of deduction or the end of the three month period after the start of active membership (as appropriate), to ensure that this additional safeguard in the law is always met An employer who wishes to take advantage of the extended safeguard for the deduction of contributions in the three months after the start of active membership will need to discuss with their pension provider a change to the scheme s payment schedule. A detailed guide to Automatic enrolment for software developers 128

129 326. To use a personal pension scheme for automatic enrolment there will have to be direct payment arrangements in place. The due dates for the payment of employer contributions is whatever date is set out under these arrangements The due date for paying any worker s contributions to the scheme is set out in the legislation. Where a person becomes an active member of a qualifying scheme (as a result of automatic enrolment, re-enrolment, enrolment or as a result of contractual enrolment) or where an entitled worker becomes an active member of a non-qualifying scheme after giving the employer a joining notice, any contributions deducted in the three month period starting from the start date of active membership must be paid across to the scheme by the 22nd day (for electronic payments) or 19th day (for cheque or cash payments) of the month after the last day of that three month period Any other contributions that have been deducted from pay 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 payments) of the month after deduction. 2.4 Automation of the assessment process 328. Whichever definition of pay reference period (assessment) an employer chooses to use as the basis of their assessment process, the relevant pay reference period (assessment) is the pay reference period (assessment) in which the assessment date falls. This is the date the employer is looking at their worker to see if this is the first date that they meet certain criteria In automating the assessment process of worker category we assume that the employer will have identified those who are workers and who meet the definition of working or ordinarily working in the UK under the worker s contract for inclusion in an automated process. So what is being automated is an assessment of the age and earnings criteria. And when it comes to making the assessment of age and earnings in an automated system the emphasis on assessment date is slightly different simply because we assume that the calculation of age and earnings is made every pay reference period (assessment). A detailed guide to Automatic enrolment for software developers 129

130 330. Where this is the case, it is important to remember that the calculation within the system is still making the assessment as at a specific date as at the assessment date falling within the pay reference period (assessment). Commonly this will be the first day of the pay reference period (assessment) (as the employer needs to identify the first point the criteria are met). In systems this means looking at the age on the assessment date and calculating the qualifying earnings payable in the pay reference period (assessment). If on the assessment date the criteria to be an eligible jobholder are met then this assessment date is also the automatic enrolment date. Examples 14a and 14b use the same facts. In example 14a the definition of a pay reference period is aligned to the period by reference to which the worker is paid their regular wage or salary. In example 14b the definition of a pay reference period is aligned to tax weeks or months. Example 14a Employer A chose the definition of a pay reference period (assessment) aligned with the period by reference to which their workers were paid, as the period of time over which to measure earnings. They have identified that they have a calendar monthly PRP (pay reference period (assessment)) that starts on the first of the month and ends on the last day of the month. Payroll is run on 25th of the month and pay date is the last working day of the month. PRP start (1/5) PRP end (31/5) May 2014 Assessment date Payroll run date (25/5) Pay date (30/5) continued... A detailed guide to Automatic enrolment for software developers 130

131 When payroll is run on 25 May the system will assess the earnings payable in the pay reference period (assessment) and the age of the worker as at 1 May, if this is the relevant assessment date. For a new starter in the month, for example, the start of the pay reference period (assessment) will not be the relevant assessment date (see below). PRP start (1/5) Start date of employment (10/5) PRP end (31/5) May 2014 Assessment date Payroll run date (25/5) Pay date (30/5) Here when payroll is run on 25 May it will assess the earnings payable in the pay reference period (assessment) and the age of the worker as at 10 May. Example 14b Employer B chose the definition of a pay reference period (assessment) aligned with tax weeks or months, as the period of time over which to measure earnings. The usual interval that they make payments to their workers of their regular wage or salary is monthly. Payroll is run on 25th of the month and pay date is the last working day of the month. continued... A detailed guide to Automatic enrolment for software developers 131

132 PRP start (6/5) PRP end (5/6) May 2014 Assessment date Payroll run date (25/5) Pay date (30/5) When payroll is run on 25 May the system will assess the earnings payable in the pay reference period (assessment) and the age of the worker as at 6 May, if this is the relevant assessment date. For a new starter in the month, for example, the start of the pay reference period (assessment) will not be the relevant assessment date (see below). PRP start (6/5) Start date of employment (10/5) PRP end (5/6) May 2014 Assessment date Payroll run date (25/5) Pay date (30/5) Here when payroll is run on 25 May it will assess the earnings payable in the pay reference period (assessment) and the age of the worker as at 10 May. A detailed guide to Automatic enrolment for software developers 132

133 331. There may be more than one assessment date in a pay reference period. As a minimum, there will be an assessment date in the pay reference period in which payroll is being run of the start date of the pay reference period It is important to get the start date of the pay reference period (which ever definition is being used for the assessment process) right as this will invariably be the assessment date and if, on the assessment date, the criteria to be an eligible jobholder are met then this assessment date is also the jobholder s automatic enrolment date As the calculation within an automated system of whether the eligible jobholder criteria are met is still making the assessment as at the assessment date falling within the pay reference period (assessment), the assessment will identify eligible jobholder status for a worker and the automatic enrolment date for that worker at the same time. Start and end of assessment process 334. In this guidance, we assume that an automated system will begin running the assessment of age and earnings for a worker in each pay reference period (assessment) (of either definition) from: the pay reference period (assessment) in which the worker s 16th birthday falls, or the pay reference period (assessment) in which the worker s first day of employment falls, or the pay reference period (assessment) in which the employer s staging date falls And that the running of the assessment ends when the worker ceases employment or turns 75. However it is important to note that the assessment will invariably still have to be run for the pay reference period (assessment) in which either of these events occur (see paragraph 342 below). New starters 336. Where an employer is paying in arrears, then in the first pay reference period (assessment) the qualifying earnings will most likely be zero. If the worker is aged between 16 and 74 then the worker will be an entitled worker. The employer will have an information duty to tell the worker about their right to join a pension scheme (assuming the employer is not using postponement). The assessment of the worker must continue on the first day of each subsequent pay reference period (assessment) to identify any further information duty or if the eligible jobholder criteria are met and automatic enrolment is triggered (assuming the employer is not using postponement). A detailed guide to Automatic enrolment for software developers 133

134 337. If the worker starts employment after payroll arrangements have closed in the pay reference period and before the end of the pay reference period the employer will have to make the assessment manually using the payroll data Where an automated system has rules about the use of postponement for new starters and postponement is automatically applied, the assessment of the worker in the next pay reference periods (assessment) up to the deferral date should recognise that postponement has applied from the start date of employment Where the employer has chosen to use the definition of a pay reference period (assessment) aligned to tax weeks or months and pay reference period (assessment) is a week or a multiple of weeks and the last pay reference period of the tax year is ended on 5 April, there will also be a pay reference period (assessment) where the qualifying earnings are zero. In this pay reference period (assessment) the workers will be entitled workers. If this is the first time the worker is an entitled worker and the worker has not previously had the information about the right to join a pension scheme this duty will be triggered from the start of the last pay reference period of the tax year An automated system should flag the entitled worker status to the employer. Similarly if the employer chooses to use postponement for any new starters in the shortened last pay reference of the tax year, manual intervention may be required to ensure that any automated assessment process is aware of the postponement in the following pay reference periods. Employment ends/75 birthday/spa birthday 341. For automatic enrolment the end of employment is the ceasing of the worker s contractual relationship with the employer and the date of ceasing employment is the date the contract ends When a worker ceases employment, then the assessment of age and earnings is not necessary for any assessment date that falls after employment end. This means that in the pay reference period (assessment) in which the worker ceases employment the assessment will still invariably have to be made as the assessment date will as a minimum be the first day of the pay reference period (assessment). A detailed guide to Automatic enrolment for software developers 134

135 Examples 15a and 15b use the same facts. In example 15a the definition of a pay reference period is aligned to the period by reference to which the worker is paid their regular wage or salary. In example 15b the definition of a pay reference period is aligned to tax weeks or months. Example 15a Where pay reference period (assessment) definition is aligned to the period by reference to which the worker is paid their regular wage or salary Employer A has chosen to use the definition of a pay reference period (assessment) aligned to the period by reference to which the worker is paid. The pay reference period (assessment) for Eric is calendar monthly starting on the first day of the month. Eric is 40 years old and has qualifying earnings payable in the pay reference period (assessment) above the earnings trigger for automatic enrolment. Eric ceases employment on 20 April. PRP start (1/4) PRP end (30/4) Eligible jobholder April Assessment date Employment end (20/4) Pay date (27/4) In the example above, pay date is 27 April but it does not matter where the pay date falls, whether it is before or after employment end, the assessment of the category of worker by the system for Eric is as at the start of the pay reference period (assessment). On 1 April Eric is 40 and the assessment of qualifying earnings for the pay reference period (assessment) identifies that he has qualifying earnings payable in the relevant pay reference period (assessment) above the earnings trigger for automatic enrolment. continued... A detailed guide to Automatic enrolment for software developers 135

136 Eric is an eligible jobholder. His automatic enrolment date (assuming this is the first time he has become an eligible jobholder and the employer is not using postponement) is 1 April and he should be automatically enrolled for the period 1 April to 20 April. Example 15b Where pay reference period (assessment) definition is aligned to tax weeks or months Employer B has chosen to use the definition of a pay reference period (assessment) aligned to tax weeks or months. The pay reference period (assessment) for Eric is monthly starting on the first day of the tax month. Eric is 40 years old and has qualifying earnings payable in the pay reference period (assessment) above the earnings trigger for automatic enrolment. Eric ceases employment on 20 April. PRP start (6/4) PRP end (5/5) Eligible jobholder April Assessment date Employment end (20/4) Pay date (27/4) continued... A detailed guide to Automatic enrolment for software developers 136

137 In the example above, pay date is 27 April but it does not matter where pay date falls, whether it is before or after employment end. The assessment of the category of worker by the system for Eric is as at the start of the pay reference period (assessment). On 6 April Eric is 40 and the assessment of qualifying earnings for the pay reference period (assessment) identifies that he has qualifying earnings payable in the relevant pay reference period (assessment) above the earnings trigger for automatic enrolment. Eric is an eligible jobholder. His automatic enrolment date (assuming this is the first time he has become an eligible jobholder and the employer is not using postponement) is 6 April and he should be automatically enrolled for the period 6 April to 20 April. Examples 16a and 16b use the same facts. In example 16a the definition of a pay reference period is aligned to the period by reference to which the worker is paid their regular wage or salary. In example 16b the definition of a pay reference period is aligned to tax weeks or months. Example 16a Where pay reference period (assessment) definition is aligned to the period by reference to which the worker is paid their regular wage or salary Employer A has chosen to use the definition of a pay reference period (assessment) aligned to the period by reference to which the worker is paid. The pay reference period (assessment) for John is calendar monthly starting on the first day of the month. John is 21 years old. His birthday is 10 April. He has qualifying earnings payable in the pay reference period (assessment) above the earnings trigger for automatic enrolment. He too leaves employment on 20 April. continued... A detailed guide to Automatic enrolment for software developers 137

138 PRP start (1/4) PRP end (30/4) Eligible jobholder April Assessment date 22nd birthday (10/4) Employment end (20/4) Pay date (27/4) John s assessment date is his 22nd birthday. On this date he is 22 and the assessment of qualifying earnings for the pay reference period (assessment) identifies that he has qualifying earnings payable in the relevant pay reference period (assessment) above the earnings trigger for automatic enrolment. John is an eligible jobholder. His 22nd birthday is the automatic enrolment date (assuming this is the first time he has become an eligible jobholder and that the employer is not using postponement) and he should be automatically enrolled for the period 10 April to 20 April. Example 16b Where pay reference period (assessment) definition is aligned to tax weeks or months Employer B has chosen to use the definition of a pay reference period (assessment) aligned to tax weeks or months. The pay reference period (assessment) for John is monthly starting on the first day of the tax month. continued... A detailed guide to Automatic enrolment for software developers 138

139 John is 21 years old. His birthday is 10 April. He has qualifying earnings payable in the pay reference period (assessment) above the earnings trigger for automatic enrolment. He too leaves employment on 20 April. PRP start (6/4) PRP end (5/5) Eligible jobholder April Assessment date 22nd birthday (10/4) Employment end (20/4) Pay date (27/4) John s assessment date is his 22nd birthday. On this date he is 22 and the assessment of qualifying earnings for the pay reference period identifies (assessment) that he has qualifying earnings payable in the relevant pay reference period (assessment) above the earnings trigger for automatic enrolment. John is an eligible jobholder. His 22nd birthday is the automatic enrolment date (assuming this is the first time he has become an eligible jobholder and that the employer is not using postponement) and he should be automatically enrolled for the period 10 April to 20 April. Examples 17a and 17b use the same facts. In example 17a the definition of a pay reference period is aligned to the period by reference to which the worker is paid their regular wage or salary. In example 17b the definition of a pay reference period is aligned to tax weeks or months. continued... A detailed guide to Automatic enrolment for software developers 139

140 Example 17a Where pay reference period (assessment) definition is aligned to the period by reference to which the worker is paid their regular wage or salary Employer A has chosen to use the definition of a pay reference period (assessment) aligned to the period by reference to which the worker is paid. The pay reference period (assessment) for Sarah is calendar monthly starting on the first day of the month. Sarah also ceases her employment on 20 April. Sarah is 33 years old and has qualifying earnings payable in the pay reference period (assessment) above the earnings trigger for automatic enrolment. She started her employment on 21 January but her employer used postponement. The deferral date is 21 April. PRP start (1/4) April PRP end (30/4) Employment end (20/4) Pay date (27/4) Assessment date Deferral date (21/4) As the assessment date (the deferral date) is after employment has ceased there is no need to assess Sarah on that date to see what category of worker she is. If the employer had not used postponement the assessment day would be the first day of the pay reference period, and just as with Eric above, the assessment would need to have taken place. continued... A detailed guide to Automatic enrolment for software developers 140

141 Example 17b Where pay reference period (assessment) definition is aligned to tax weeks or months Employer B has chosen to use the definition of a pay reference period (assessment) aligned to tax weeks or months. The pay reference period (assessment) for Sarah is monthly starting on the first day of the tax month. Sarah also ceases her employment on 20 April. Sarah is 33 years old and has qualifying earnings payable in the pay reference period (assessment) above the earnings trigger for automatic enrolment. She started her employment on 21 January but her employer used postponement. The deferral date is 21 April. PRP start (6/4) April PRP end (5/5) Employment end (20/4) Pay date (27/4) Assessment date Deferral date (21/4) As the assessment date (the deferral date) is after employment has ceased there is no need to assess Sarah on that date to see what category of worker she is. If the employer had not used postponement the assessment day would be the first day of the pay reference period, and just as with Eric above, the assessment would need to have taken place. A detailed guide to Automatic enrolment for software developers 141

142 343. The same principle applies when the 75th birthday is reached. Only when the assessment date is on or after the 75th birthday does assessment cease. PRP start April PRP end Assessment date 75th birthday (20/4) Pay date (27/4) For assessment dates after this date there is no need to make an assessment Note: If the assessment date is before the 75th birthday then the assessment in an automated system is as normal age as at the assessment date and an assessment of whether qualifying earnings are payable in the whole pay reference period (assessment) The same principle also applies when SPA is reached for the eligible jobholder assessment. Here though, if SPA date falls part way through a pay reference period (assessment) then potentially the worker will be an eligible jobholder for part of the period and a non-eligible jobholder for the remainder. Earnings 900 per month Eligible job holder non-eligible job holder PRP start SPA date PRP end Assessment date for eligible job holder Assessment date for non-eligible job holder A detailed guide to Automatic enrolment for software developers 142

143 345. The assessment needs to be made as at both the SPA date and the start date of the pay reference period (assessment) in this example to ensure that the period of eligibility is correctly identified Where SPA date falls part way through a pay reference period (assessment), for an automated system making the assessment of eligible jobholder status the assessment date is usually the start of the pay reference period (assessment) (assuming that no other assessment date such as a deferral date falls in the period between PRP start and SPA). The system is considering the age as at the assessment date and whether qualifying earnings are payable above the earnings trigger for automatic enrolment in the whole pay reference period (assessment) ( 900 in the last diagram) The system is also making the assessment of non-eligible jobholder status and the assessment date for this is state pension age (being the latest assessment date for non-eligible jobholder that falls in the pay reference period (assessment)). The assessment is considering whether qualifying earnings are payable for the whole pay reference period (assessment) ( 900 in the last diagram). Payroll run and pay date in different pay reference periods 348. If the calculation routines for the assessment are being run in one pay reference period (assessment) but pay date falls in another pay reference period (assessment), care must be taken to ensure that the calculation routines in an automated system are considering the correct start and end dates of the pay reference period for the assessment. Examples 18a and 18b use the same facts. In example 18a the definition of a pay reference period is aligned to the period by reference to which the worker is paid their regular wage or salary. In example 18b the definition of a pay reference period is aligned to tax weeks or months. Example 18a Where pay reference period (assessment) definition is aligned to the period by reference to which the worker is paid their regular wage or salary Employer A has chosen to use the definition of a pay reference period (assessment) aligned to the period by reference to which the worker is paid. The pay reference period (assessment) for Saheed is four-weekly. A detailed guide to Automatic enrolment for software developers 143

144 22nd birthday 18/5 Payroll run date (26/4) Pay date (5/5) PRP start (1/4) PRP end (28/4) PRP start (29/4) PRP end (26/5) Relevant PRP Saheed turns 22 on 18 May. His employer identifies that the relevant pay reference period (assessment) is the one that starts on 29 April and ends on 26 May. The next step for his employer is to identify whether qualifying earnings are payable in the relevant pay reference period (assessment). The qualifying earnings payable in the period 29 April to 26 May are those that fall to be paid on 5 May. The calculation of the earnings that fall to be paid on 5 May is made on 26 April which is in the previous pay reference period (assessment). An automated system making the assessment in the calculation being run on 26 April will need to consider the assessment date or dates that fall in the next pay reference period (assessment) rather than the one it is being run in. That calculation is identifying that the eligible jobholder criteria is met on 18 May, the automatic enrolment date (18 May) but is not calculating the first deduction (as pay date is before the automatic enrolment date). If the assessment date was the start of the pay reference period (assessment) (see diagram below), then the calculation being done in the payroll that is run on 26 April is identifying that the eligible jobholder criteria is met on 29 April, the automatic enrolment date (29 April) and calculating the first deduction (as pay date is after the automatic enrolment date) all at the same time. continued... A detailed guide to Automatic enrolment for software developers 144

145 Assessment date Payroll run date (26/4) Pay date (5/5) PRP start (1/4) PRP end (28/4) PRP start (29/4) PRP end (26/5) Relevant PRP Example 18b Where pay reference period (assessment) definition is aligned to tax weeks or months Employer B has chosen to use the definition of a pay reference period (assessment) aligned to tax weeks or months. The pay reference period for Saheed is four-weekly. 22nd birthday 18/5 Payroll run date (26/4) Pay date (5/5) PRP start (6/4) PRP end (3/5) PRP start (4/5) PRP end (31/5) Relevant PRP continued... A detailed guide to Automatic enrolment for software developers 145

146 Saheed turns 22 on 18 May. His employer identifies that the relevant pay reference period (assessment) is the one that starts on 4 May and ends on 31 May. The next step for his employer is to identify whether qualifying earnings are payable in the relevant pay reference period (assessment). The qualifying earnings payable in the period 4 May to 31 May are those that fall to be paid on 5 May. The calculation of the earnings that fall to be paid on 5 May is made on 26 April which is in the previous pay reference period (assessment). An automated system making the assessment in the calculation being run on 26 April will need to consider the assessment date or dates that fall in the next pay reference period (assessment) rather than the one it is being run in. That calculation is identifying that the eligible jobholder criteria is met on 18 May, the automatic enrolment date (18 May) but is not calculating the first deduction (as pay date is before the automatic enrolment date). If the assessment date was the start of the pay reference period (assessment) (see diagram below), then the calculation being done in the payroll that is run on 26 April is identifying that the eligible jobholder criteria is met on 4 May, the automatic enrolment date (4 May) and calculating the first deduction (as pay date is after the automatic enrolment date) all at the same time. Assessment date Payroll run date (26/4) Pay date (5/5) PRP start (6/4) PRP end (3/5) PRP start (4/5) PRP end (31/5) Relevant PRP continued... A detailed guide to Automatic enrolment for software developers 146

147 Assessment process late in the joining window 349. The other importance of the automatic enrolment date is that it is the start of the joining window the six week period the employer has to complete the administrative steps for automatic enrolment As the calculation within an automated system is identifying eligible jobholder status for a worker and the automatic enrolment date for that worker at the same time, this means that where the assessment date in a pay reference period (assessment) is before payroll run date for that period that the employer will lose some or all of the six week joining window. Examples 19a and 19b use the same facts. In example 19a the definition of a pay reference period is aligned to the period by reference to which the worker is paid their regular wage or salary. In example 19b the definition of a pay reference period is aligned to tax weeks or months. Example 19a Where pay reference period (assessment) definition is aligned to the period by reference to which the worker is paid their regular wage or salary Employer A has chosen to use the definition of a pay reference period (assessment) aligned to the period by reference to which the worker is paid. The pay reference period (assessment) is calendar monthly starting on the first day of the month. PRP start (1/4) April Payroll run date (25/4) Pay date (27/4) PRP end (30/4) Assessment date continued... A detailed guide to Automatic enrolment for software developers 147

148 When payroll is run on 25 April the system identifies that the criteria to be an eligible jobholder for Worker A are met on the first day of the pay reference period (assessment). Worker A s automatic enrolment date is the first day of the pay reference period (1 April). This is the start of the six week joining window for the employer to complete automatic enrolment. The employer has until 12 May to complete automatic enrolment. However, the employer has not identified that automatic enrolment is triggered until 25 April when running payroll and so in practice the employer has from 25 April to 12 May to complete automatic enrolment. Example 19b Where pay reference period (assessment) definition is aligned to tax weeks or months Employer B has chosen to use the definition of a pay reference period (assessment) aligned to tax weeks or months. The pay reference period (assessment) is monthly starting on the first day of the tax month. PRP start (6/4) April Payroll run date (25/4) Pay date (27/4) PRP end (5/5) Assessment date When payroll is run on 25 April the system identifies that the criteria to be an eligible jobholder for Worker A are met on the first day of the pay reference period (assessment). Worker A s automatic enrolment date is the first day of the pay reference period (6 April). This is the start of the six week joining window for the employer to complete automatic enrolment. The employer has until 17 May to complete automatic enrolment. continued... A detailed guide to Automatic enrolment for software developers 148

149 However, the employer has not identified that automatic enrolment is triggered until 25 April when running payroll and so in practice the employer has from 25 April to 17 May to complete automatic enrolment. Pay reference periods (assessment) of six weeks or less 351. Where the pay reference period is equal to or shorter than the six week joining window, the employer will need to ensure that they can complete the administrative steps for automatic enrolment within what is left of the joining window in the event that the automatic enrolment date is between the start of the pay reference period (assessment) and payroll run date There is nothing that prevents the employer preparing the enrolment information and jobholder information in advance of payroll run. They will need to talk to their pension provider about the length of time the provider will need to complete their administrative steps to establish active membership. It may be in some cases where payroll run is very late in the pay reference period that the employer may wish to consider doing an earlier run of payroll. Pay reference periods (assessment) longer than six weeks 353. An employer with a pay reference period (assessment) longer than six weeks but where pay is calculated within six weeks of the start of the pay reference period (assessment) will face the same considerations as in paragraph 352 above An employer with a pay reference period (assessment) longer than six weeks and where pay is not calculated within six weeks of the start of the pay reference period (assessment) will need to automatically enrol all their workers not in a qualifying scheme in at the start of the pay reference period (assessment) unless they are absolutely sure that the earnings trigger will never be reached. For example a worker with a salary below the lower level of qualifying earnings and with no expectation of a bonus, overtime or commission payments This means that the employer completes the administrative steps for automatic enrolment within the six week joining window. When payroll is run for the pay reference period (assessment) this will confirm whether the prediction of eligible jobholder status was correct. If it is, then a deduction of contributions is made where a contribution is payable under the scheme. If not, no deduction is made. A detailed guide to Automatic enrolment for software developers 149

150 356. An employer will need to talk to their pension provider and make sure that they and the provider are able to complete the administrative steps for automatic enrolment and then unravel those steps should the payroll run confirm the worker is not an eligible jobholder An employer may also wish to consider adding to the enrolment information to explain to the worker that if the earnings trigger is not met in the pay reference period (assessment) then automatic enrolment will not go ahead. Non-standard pay reference periods (definition of a pay reference period (assessment) aligned to period by reference to which the worker is paid) 358. This only applies where an employer has chosen to use the definition of a pay reference period (assessment) aligned to the period by reference to which the worker is paid Some employers operate pay reference periods (assessment) of a different duration to those listed in Table 9 on page 53. We also understand that some employers operate pay reference periods (assessment) of varying length for the same worker, for example a cycle of 4, 4, 5 (a four-weekly period followed by a four-weekly period followed by a five-weekly period). Such an employer may have a monthly pay frequency but as discussed in paragraph 156 the pay frequency is not the basis for the pay reference period (assessment) under this definition Where an employer is operating pay reference periods (assessment) of varying length and paying in arrears then the amount of qualifying earnings in a pay reference period (assessment) may relate to a longer period of time than the applicable threshold for that pay reference period (assessment) For example, where an employer is operating a 4, 4, 5 pay reference period (assessment) and they pay in arrears this will mean the amount of money that was earned in a five-weekly period will be assessed in a four-weekly pay reference period (assessment). This is not because the employer operates 4, 4, 5 pay reference periods (assessment) but because it is combined with paying in arrears. An employer operating a 4, 4, 5 pay reference period (assessment) and paying in the current period would have five-weekly earnings being assessed in a five-weekly pay reference period (assessment). This is a consequence of the fact that the employer has to assess whether qualifying earnings are payable in the relevant pay reference period (assessment). A detailed guide to Automatic enrolment for software developers 150

151 Errors 362. The employer is required to assess whether qualifying earnings are payable in the relevant pay reference period (assessment) (whichever definition they have chosen to use). As described in paragraph 172 this means qualifying earnings actually paid in the pay reference period (assessment) as well as what is due to paid or ought to have been paid in the pay reference period (assessment) Where an overpayment of qualifying earnings has been made in one pay reference period and is corrected in a following pay reference period, the employer should assess what ought to have been paid in each pay reference period (assessment) For example, Robin has a two weekly pay reference period (assessment) under the definition of a pay reference period aligned to the period by reference to which a worker is paid their regular wage or salary. In the pay reference period (assessment) that starts on 5 August his employer calculates his wage to be 500. His employer assesses his qualifying earnings for the pay reference period (assessment) 5 August to 18 August as 500. In the next pay reference period (assessment) his employer calculates his wage to be 700. However, Robin s employer realises that an error was made in the previous pay reference period (assessment) and Robin was overpaid 100. His employer recoups the 100 overpayment from Robin s wage and so his earnings in this pay reference period (assessment) 19 August to 1 September is 600. For automatic enrolment purposes his employer reassesses the qualifying earnings for the pay reference period (assessment) 5 August to 18 August as 400, and assesses the qualifying earnings for the pay reference period (assessment) 19 August to 1 September as Similarly where an underpayment of qualifying earnings has been made in one pay reference period (assessment) and is corrected in a following one, the employer should again assess what ought to have been paid in each pay reference period (assessment) when assessing whether qualifying earnings are payable in each one Care should be taken to understand when an amount is payable. For example, an underpayment may arise because an overtime sheet was missed off. If a worker s contract states that overtime is payable at a particular point in time, then the resulting underpayment should be treated as in paragraph 365 above. If, however under the contract, overtime is simply due at the point it is processed, then there is no underpayment of qualifying earnings and the overtime is counted at the point it is payable (ie the pay reference period (assessment) in which it is processed). A detailed guide to Automatic enrolment for software developers 151

152 367. Where the employer is using a minimum requirement pension scheme (see paragraph 232 to 236) the handling of errors is different. The entitlement under the scheme rules is to x% of the amount of the jobholder s qualifying earnings in the relevant pay reference period (contribution entitlement). In Robin s example above (assume the same definition of pay reference period is being used for assessment and contribution entitlement) the amount of Robin s qualifying earnings in the pay reference period (contribution entitlement) 5 August to 18 August is 500 (but 400 for the purposes of assessment). And the amount of Robin s qualifying earnings in the pay reference period (contribution entitlement) 19 August to 1 September is 600 (but 700 for the purposes of assessment). Backdated pay 368. The same principles described in paragraphs 362 to 367 apply to payments of backdated pay. Just as described with errors the employer is required to assess in the assessment of the worker not just what is paid in the pay reference period (assessment) but what ought to have been paid As with overpayments and underpayments, when handling backdated pay, care should be taken to understand when, under the worker s contract, the backdated amount is actually payable. If the contract states that pay awards are payable at a particular point in time, then irrespective of when the payments are actually processed and paid, they should be considered at the point when they were payable. If, however under the contract, pay increases are simply due at the point they are processed/paid/agreed, then they will only need to be considered at this point For example, if under the worker s contract, pay is reviewed every April and any increase takes effect from this date, then if the pay award is not actually processed until November s pay reference period (assessment), what ought to have been paid in each pay reference period (assessment) from April needs to be re-assessed And as in paragraph 367 where the employer is using a minimum requirement pension scheme the entitlement under the scheme rules is to x% of the amount of the jobholder s qualifying earnings in the relevant pay reference period (contribution entitlement). A detailed guide to Automatic enrolment for software developers 152

153 Advances of pay 372. Where an advance of pay takes place purely for practical or administrative purposes rather than as a requirement under the worker s contract, then the advanced earnings should continue to be assessed in the future pay reference periods (assessment) in which they are payable rather than in the period in which, for administrative purposes only, they are paid For example where a weekly paid worker is paid an additional week s worth of advanced pay to cover a forthcoming holiday period but this is not a contractual agreement, then the advanced earnings should be assessed as payable during the week that the worker is on holiday. In this way, an administrative arrangement for a double payment for a low earner will not increase the likelihood of that worker earning above the threshold values and potentially falling to be automatically enrolled As before, where the employer is using a minimum requirement pension scheme the entitlement under the scheme rules is to x% of the amount of the jobholder s qualifying earnings in the relevant pay reference period (contribution entitlement). Supplementary payrolls 375. If an employer runs a supplementary payroll run for the worker (that is not correcting an error) the qualifying earnings payable in this payroll must be added to the qualifying earnings in the main payroll payable in that pay reference period (assessment) for assessment purposes. Examples 20a and 20b use the same facts. In example 20a the definition of a pay reference period is aligned to the period by reference to which the worker is paid their regular wage or salary. In example 20b the definition of a pay reference period is aligned to tax weeks or months. Example 20a Where pay reference period (assessment) definition is aligned to the period by reference to which the worker is paid their regular wage or salary This example uses a calendar monthly pay reference period (assessment) that starts on 15th of the month. continued... A detailed guide to Automatic enrolment for software developers 153

154 PRP start 15/11 PRP end 14/12 Supplementary payroll 20/11 Main payroll 11/12 In the example above Serena s relevant pay reference period (assessment) is the one that starts on 15 November and ends on 14 December. Her employer knows that the next step is to assess whether qualifying earnings are payable in this relevant pay reference period (assessment). The qualifying earnings payable in this period are those that fall to be paid on 20 November and 11 December. Example 20b Where pay reference period (assessment) definition is aligned to tax weeks or months This example uses a usual interval between payments of the worker s regular wage or salary of a month. PRP start 6/12 PRP end 5/1 Supplementary payroll 20/11 Main payroll 11/12 Supplementary payroll 20/12 continued... A detailed guide to Automatic enrolment for software developers 154

155 In the example above Serena s relevant pay reference period (assessment) is the one that starts on 6 December and ends on 5 January. Her employer knows that the next step is to assess whether qualifying earnings are payable in this relevant pay reference period (assessment). The qualifying earnings payable in this period are those that fall to be paid on 11 December and in the next supplementary payroll of 20 December. The supplementary payroll of 20 November falls in the previous pay reference period of 6 November to 5 December Where an employer has chosen to use the definition of a pay reference period (assessment) aligned to tax weeks or months as the basis of their assessment process and the usual interval between payments of a worker s regular wage or salary is a week or a multiple of a week there may be overlapping pay reference periods (assessment) around the 6 April each year Where there are supplementary payrolls so that there is more than one date when the qualifying earnings in that last pay reference period (assessment) are paid or payable, if any of those dates are before 6 April the pay reference period (assessment) is not ended on 5 April It is key to remember that the last pay reference period (assessment) of the tax year is only ended on 5 April if the qualifying earnings that are payable for that pay reference period (assessment) are paid or payable on or after 6 April. Therefore if the supplementary payroll run is to correct errors made in a previous pay reference period (assessment) so that it relates to qualifying earnings that are in fact payable in a previous pay reference period (assessment) it is not counted here when considering whether the pay reference period (assessment) is ended on 5 April Conversely if the supplementary payroll run is of qualifying earnings payable in that last pay reference period (assessment) of the tax year the date that those qualifying earnings are payable in that supplementary run is a relevant consideration when considering whether the pay reference period (assessment) is ended on 5 April (see example below). A detailed guide to Automatic enrolment for software developers 155

156 Example 21 Martyn turns 22 on 18 April. His employer has chosen to use the definition of a pay reference period (assessment) aligned to tax weeks or months. The employer identified that the usual interval between payments of Martyn s regular wage or salary was four-weekly. His employer knows that the last pay reference period (assessment) of the tax year is the one 5 April (not a leap year) to 2 May. They also know that the next pay reference period (assessment) is the one starting on 6 April to 3 May. In the pay reference period of 5 April to 2 May there is a supplementary payroll which is payable on 5 April and a main payroll run which is payable on 30 April. The supplementary payroll on 5 April is to correct previous period and to prepare payroll records for the tax year end. As such the supplementary payroll contains earnings that were due to be paid in previous pay reference periods (assessment). It does not contain qualifying earnings that are due to be paid in the pay reference period (assessment) of 5 April to 2 May. Qualifying earnings are payable on this date (5 April) - supplementary payroll (correcting qualifying earnings in previous PRPs assessment)) 22nd birthday 18/4 Qualifying earnings are payable on this date (30 April) - main payroll 5/4 2/5 6/4 3/5 The qualifying earnings that are payable in that pay reference period (assessment) are those that are due to be paid in the main payroll run of 30 April. As this date is after 6 April Martyn s employer knows that the last pay reference period (assessment) of the tax year is ended on 5 April. continued... A detailed guide to Automatic enrolment for software developers 156

157 Qualifying earnings are payable on this date (5 April) - supplementary payroll (correcting qualifying earnings in previous PRPs assessment)) 22nd birthday 18/4 Qualifying earnings are payable on this date (30 April) - main payroll 5/4 5/4 6/4 3/5 Although the supplementary payroll run is paid in the shortened pay reference period (assessment) of 5 April to 5 April, it relates to qualifying earnings due to be paid in previous pay reference periods (assessment). Therefore, there are no qualifying earnings payable in this pay reference period (assessment) and Martyn is an entitled worker as at 5 April (the assessment date of the first day of the pay reference period (assessment)). Martyn s employer also knows that another relevant pay reference period (assessment) for Martyn is 6 April to 3 May as this is one pay reference period (assessment) in which the assessment date falls his 22nd birthday (18 April)). The qualifying earnings payable in this period are those that are due to be paid on 30 April in the main payroll. His employer compares these earnings against the four-weekly trigger for automatic enrolment that applies for the tax year starting on 6 April and identifies that Martyn is an eligible jobholder and automatic enrolment is triggered (unless the employer chooses to use postponement). His automatic enrolment date is 18 April. We understand that the majority of supplementary payroll runs on a 5 April would be for the purpose of adjusting a previous period in preparation for the tax year end. It is only by exception that a supplementary run on 5 April would be for an alternative purpose. For the sake of completeness we cover that exceptional scenario below. continued... A detailed guide to Automatic enrolment for software developers 157

158 Alternatively if the supplementary payroll on 5 April is not adjusting qualifying earnings in a previous pay reference period (assessment), for example, paying allowances or overtime instead then, in the pay reference period (assessment) of 5 April to 2 May the qualifying earnings that are payable in that period are due to be paid in a supplementary payroll (for allowances and overtime) on 5 April and with a main payroll on 30 April. As the first date that qualifying earnings are paid or payable falls before 6 April, Martyn s employer determines therefore that in this case this pay reference period (assessment) is not ended on 5 April and runs for the whole four week period. Qualifying earnings are payable on this date (5 April) - supplementary payroll 22nd birthday 18/4 Qualifying earnings are payable on this date (30 April) - main payroll 5/4 2/5 6/4 3/5 Qualifying earnings are payable on this date (3 May) - supplementary payroll Martyn s employer identifies that one relevant pay reference period (assessment) for Martyn is 5 April to 2 May as this is one pay reference period (assessment) in which the assessment date (his 22nd birthday (18 April)) falls. The qualifying earnings payable in this period are those that are due to be paid on 5 April in the supplementary payroll (for allowances and overtime) and those due to be paid on 30 April in the main payroll (which falls in the next tax year). His employer compares these combined earnings against the four-weekly earnings trigger for automatic enrolment that applies for the tax year starting on 6 April (as this is the earnings trigger that applies at the assessment date) and identifies that Martyn is an eligible jobholder and automatic enrolment is triggered (unless the employer chooses to use postponement). His automatic enrolment date is 18 April. continued... A detailed guide to Automatic enrolment for software developers 158

159 His employer also knows that another relevant pay reference period for Martyn is 6 April to 3 May as this is one pay reference period (assessment) in which the assessment date falls his 22nd birthday (18 April)). The qualifying earnings payable in this period are those that are due to be paid on 30 April in the main payroll and those due to be paid on 3 May in the next supplementary payroll (for allowances and overtime). His employer compares these combined earnings against the four-weekly trigger for automatic enrolment that applies for the tax year starting on 6 April (as this is the earnings trigger that applies at the assessment date) and identifies that Martyn is an eligible jobholder and automatic enrolment is triggered (unless the employer chooses to use postponement). His automatic enrolment date is 18 April. Making the first deduction 380. As the calculation within an automated system of whether the eligible jobholder criteria are met is still making the assessment as at the assessment date falling within the pay reference period, the assessment will identify eligible jobholder status for a worker and the automatic enrolment date for that worker at the same time As active membership must start from the automatic enrolment date where contributions are due under the scheme rules or governing documentation, 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. Contributions may not be due under the scheme if the scheme is a minimum requirement pension scheme and the definition of pay reference period (contribution entitlement) is not the 12 month (or shorter) definition aligned to the employer s staging date (as described in paragraphs 243 to 306). Or if the rules or the governing documentation of the scheme otherwise provide. For example, pensionable pay is defined as earnings earned during the pay reference period Under the legislation an employer is required to deduct any contributions payable (ie due under the rules) from any qualifying earnings or pensionable pay on or after the automatic enrolment date. The result is that where the automatic enrolment date falls on or before pay date, the calculation in the automated system is identifying that the eligible jobholder criteria is met, the automatic enrolment date for the eligible jobholder and calculating the first deduction of contributions (where due under the rules) all at the same time (see below). A detailed guide to Automatic enrolment for software developers 159

160 Examples 22a and 22b use the same facts. In example 22a the definition of a pay reference period is aligned to the period by reference to which the worker is paid their regular wage or salary. In example 22b the definition of a pay reference period is aligned to tax weeks or months. Example 22a Where the definition of pay reference period (contribution entitlement) is aligned to the period by reference to which the worker is paid their regular wage or salary This example uses a calendar monthly pay reference period (contribution entitlement), starting on the first day of the calendar month. New starter 14/10 automatic enrolment date Pay date 24/10* Pay date 24/11** October November Period of deduction Relevant pay reference period (contribution entitlement) *must include pension contribution deduction for 14/10 to 31/10 **must include pension contribution deduction for 1/11 to 30/11 continued... A detailed guide to Automatic enrolment for software developers 160

161 Example 22b Where the definition of pay reference period (contribution entitlement) is aligned to tax weeks or months This example uses a pay reference period (contribution entitlement) that is a month in length. New starter 14/10 automatic enrolment date Pay date 24/10* Pay date 24/11** October November Period of deduction Relevant pay reference period (contribution entitlement) *must include pension contribution deduction for 14/10 to 5/11 **must include pension contribution deduction for 6/11 to 5/ If the assessment of eligible jobholder status from payroll data is being split from the calculation of the first deduction across different business applications, developers of those applications should be mindful of the need to make an immediate deduction in the payroll system where the automatic enrolment date (as identified in the separate assessment of the payroll data) falls on or before pay date Where the automatic enrolment date falls after pay date but before the end of the pay reference period in which the assessment is being made, the result is that the first contribution payment, where a contribution is due under the scheme, is in respect of a period longer than a pay reference period (see below). A detailed guide to Automatic enrolment for software developers 161

162 Examples 23a and 23b use the same facts. In example 23a the definition of a pay reference period is aligned to the period by reference to which the worker is paid their regular wage or salary. In example 23b the definition of a pay reference period is aligned to tax weeks or months. Example 23a Where the definition of pay reference period (contribution entitlement) is aligned to the period by reference to which the worker is paid their regular wage or salary This example uses a calendar monthly pay reference period (contribution entitlement), starting on the first day of the calendar month. Pay date 24/10 New starter 26/10 automatic enrolment date Pay date 24/11* October November Relevant pay reference period (contribution entitlement) Period of deduction *must include pension contribution deduction for 26/10 to 5/12 Example 23b Where the definition of pay reference period (contribution entitlement) is aligned to tax weeks or months This example uses a pay reference period (contribution entitlement) that is a month in length. continued... A detailed guide to Automatic enrolment for software developers 162

163 Pay date 24/10 New starter 26/10 automatic enrolment date Pay date 24/11* October November Relevant pay reference period (contribution entitlement) Period of deduction *must include pension contribution deduction for 26/10 to 5/ In this circumstance the system does not make the assessment of eligible jobholder status and the first deduction in the same calculation routine In either case this means that for the first payment, contributions will need to be calculated on part-period earnings Employers should note that this is different to assessing the category of worker, where earnings for the whole pay reference period are assessed (see diagrams at paragraph 330) An employer may use postponement to avoid such part-period calculations. Postponement cannot be used at automatic reenrolment. A detailed guide to Automatic enrolment for software developers 163

164 2.5 Data sources Key The use of binary flags suggests one way of achieving the necessary function within the system. However, there may be other ways to achieve the same function. It is for developers to decide what is appropriate within their system(s). Note 1: References to pay reference period includes reference to either definition of pay reference period for the assessment of workers unless explicitly stated. Note 2: Date means the data is assumed to be in the format dd/mm/yyyy and is a valid date in the Gregorian calendar, although it is for individual systems to decide how dates are held internally. Some of the calculations listed below involve adding or subtracting a number of months to a particular date. Instructions for performing these calculations are provided below: When adding months Add the stated number of months, subtract one day and adjust the year value as necessary eg adding three months to 01/11/2011 and subtracting a day results in 31/01/2012. When subtracting months Subtract the required number of months, add one day and adjust the year value as necessary eg subtracting three months from 31/01/2012 and adding one day results in 01/11/2011. Data source: Automatic enrolment data Description of data A1 Employer s duty start date Also known as the staging date. This is the date defined in regulations on which an employer becomes subject to the enrolment duties for the first time. Employers can also elect to move their staging date forward to an earlier date. In order to do this, they must meet certain criteria. Firstly, the employer must have an existing staging date this can be checked on our website at Abbreviation used Duty_start Value [Various] Recommended field size Date continued... A detailed guide to Automatic enrolment for software developers 164

165 Data source: Automatic enrolment data Description of data Secondly, the employer must have: contacted a pension scheme that could be used to comply with the employer duties sought and obtained agreement that the selected scheme can be used to fulfil the duties from the new (earlier) staging date. This agreement must be obtained from: the trustees or managers, for occupational pension schemes, or the provider, for personal pension schemes, or the scheme administrator as registered with Her Majesty s Revenue & Customs (HMRC). notified the regulator accordingly in writing within a prescribed time limit (at least one calendar month in advance of the earlier staging date). More information about bringing the staging date forward can be found on our website at forward. Most employers cannot move their staging date backwards under any circumstance. The exception is where an employer meets the definition of small employer. The legislation describes a particular type of small employer for the purposes of staging. A small employer is an employer who had fewer than 50 workers on 1 April 2012 and who had or was part of a PAYE scheme, or schemes, in which there were 50 persons or more on 1 April A small employer who matches the description above would ordinarily have an earlier staging date if their PAYE scheme was either not shared or only contained workers. For this reason, a small employer can choose to keep their original staging date or move it to a later new prescribed date so that it becomes their modified staging date. A detailed guide to Automatic enrolment for software developers 165

166 Data source: Automatic enrolment data Description of data A2 Qualifying earnings lower threshold The employer duties vary depending on whether a worker has qualifying earnings (see section 1 of this guidance). Qualifying earnings are earnings above a lower threshold made up of a range of pay components specified in the legislation. The value of qualifying earnings is capped at an upper threshold. The values here are published in an Order (a form of secondary legislation) by the DWP. The Order contains the values for the pay reference periods set out in the table. These values will be reviewed annually and may be updated through a new Order. If changes are to be made to the values, the DWP intends that the announcement will be in November each year. Any changes will be available on our website following the announcement. If changes are made to the values they will take effect from 6 April each year. For any pay reference period which starts on or after the 6 April it will be the updated thresholds that should be applied. Where 6 April falls part way through a pay reference period the relevant consideration for determining which of the current or updated thresholds to apply is the assessment date. It is this date that the employer is considering whether the criteria for each category of worker are met (or as at this date in an automated system). If the assessment date is before 6 April the threshold to apply will be the existing threshold. If the assessment date is on or after 6 April the threshold to apply will be the updated thresholds. NB1: If the relevant pay reference period is a period that is not on the list, the appropriate threshold amount will need to be derived. See A4 for more detail. Abbreviation used QE_LT Value Annual 5, Weekly Calendar monthly Fortnightly (2 weeks) Lunar monthly (4 weeks) Quarterly (3 calendar months) 1, Biannual (6 calendar months) 2, Recommended field size xxx,xxx.xx A detailed guide to Automatic enrolment for software developers 166

167 Data source: Automatic enrolment data Description of data A3 Qualifying earnings upper threshold Workers who earn above the upper threshold have capped qualifying earnings and still attract the duties in the same way as other workers with qualifying earnings (ie the employer must automatically enrol them if all other conditions are met). This threshold will be relevant for the calculation of contributions if the pension scheme the employer is using uses qualifying earnings as its definition of pensionable pay. The values here also published in the DWP Order referred to in A2. The Order contains the values for the pay reference periods set out in the table. These values will be reviewed annually and may be updated through a new Order. If changes are to be made to the values, the DWP intends that the announcement will be in November each year. Any changes will be available on our website following the announcement. If changes are made to the values they will take effect from 6 April each year. For any pay reference period which starts on or after the 6 April it will be the updated thresholds that should be applied. Where 6 April falls part way through a pay reference period the relevant consideration for determining which of the current or updated thresholds to apply is the assessment date. It is this date that the employer is considering whether the criteria for each category of worker are met (or as at this date in an automated system). If the assessment date is before 6 April the threshold to apply will be the existing threshold. If the assessment date is on or after 6 April the threshold to apply will be the updated thresholds. NB1: If the relevant pay reference period is a period that is not on the list, the appropriate threshold amount will need to be derived. See A4 for more detail. Abbreviation used QE_UT Value Annual 41, Weekly Calendar monthly 3, Fortnightly (two weeks) 1, Lunar monthly (four weeks) 3, Quarterly (three calendar months) 10, Biannual (six calendar months) 20, Recommended field size xxx,xxx.xx A detailed guide to Automatic enrolment for software developers 167

168 Data source: Automatic enrolment data Description of data A4 Earnings trigger for automatic enrolment The employer must automatically enrol workers with qualifying earnings above a trigger point. The values here are also published in the DWP Order referred to in A2. The Order contains the values for the pay references set out in the table. These values will be reviewed annually and may be updated through a new Order. If changes are to be made to the values, the DWP intends that the announcement will be in November each year. Any changes will be available on our website following the announcement. If changes are made to the values they will take effect from 6 April each year. For any pay reference period which starts on or after the 6 April it will be the updated thresholds that should be applied. Where 6 April falls part way through a pay reference period the relevant consideration for determining which of the current or updated thresholds to apply is the assessment date. It is this date that the employer is considering whether the criteria for each category of worker are met (or as at this date in an automated system). If the assessment date is before 6 April the threshold to apply will be the existing threshold. If the assessment date is on or after 6 April the threshold to apply will be the updated thresholds. NB1: If the relevant pay reference period is a period that is not on the list, the appropriate threshold amount will need to be derived. For variations of a weekly period, multiply the number of weeks in the relevant pay reference period by the appropriate weekly threshold. For example, if the relevant pay reference period is a five-weekly period, the earnings trigger for automatic enrolment will be 960 (5 x 192). For variations of a monthly period, multiply the number of months in the relevant pay reference period by the appropriate monthly threshold. For example, if the relevant pay reference period is a two monthly period, the earnings trigger for automatic enrolment will be 1,666 (2 x 833). Do not use daily rates as the threshold cannot be broken down into days. Abbreviation used AE_trig Value Annual 10, Weekly Calendar monthly Fortnightly (two weeks) Lunar monthly (four weeks) Quarterly (three calendar months) 2, Biannual (six calendar months) 4, Recommended field size xxx,xxx.xx A detailed guide to Automatic enrolment for software developers 168

169 Data source: Automatic enrolment data Description of data A5 A6 End of transitional period for schemes with defined benefits Where the employer has an occupational defined benefit (DB) scheme or occupational hybrid scheme with defined benefits, the employer is permitted to delay automatic enrolment for an initial transitional period under specified conditions. It may only be delayed for those workers who meet the conditions. The transitional period for schemes with defined benefits is a period of five years and three months from 01/07/2012. This data item is only required if the employer is using the transitional period for schemes with defined benefits (and DB_flag = Y see B8) NB1: An employer may choose to use postponement (see B4) as well as the transitional period for those workers who meet the conditions for the transitional period for schemes with defined benefits. The cyclical automatic re-enrolment date An employer must put their eligible jobholders who are no longer active members of a qualifying scheme (either because they opted out or ceased membership of a qualifying scheme) back in to an automatic enrolment scheme on a three yearly cycle. We refer to this automatic re-enrolment every three years as cyclical automatic reenrolment to distinguish it from when an employer must automatically re-enrol a jobholder immediately (because active membership of a qualifying scheme has ceased and it was not of the jobholder s own volition). Abbreviation used DB_phasing_end Value 30/09/2017 Recommended field size Date Abbreviation used care_date Value [Various] Recommended field size Date continued... A detailed guide to Automatic enrolment for software developers 169

170 Data source: Automatic enrolment data Description of data Any workers must be automatically re-enrolled with effect from the cyclical automatic re-enrolment date if they are eligible jobholders on that date and: a. have had an automatic enrolment date with that employer, and b. are not active members of a qualifying pension scheme with that employer, and c. who opted out or ceased membership of a qualifying pension scheme with that employer more than 12 months before the automatic re-enrolment date, and d. who are not subject to the transitional period for schemes with defined benefits. Postponement cannot be used at automatic re-enrolment. The cyclical automatic re-enrolment date is a date of the employer s choosing within a six month window. The first six month window starts three calendar months before the third anniversary of the employer s staging date and ends three calendar months after that third anniversary. For example, Employer A has a staging date of 1 April Their first re-enrolment window is 1 January 2016 to 30 June Unlike the automatic enrolment date the automatic re-enrolment date is an employer level date. So an employer cannot apply different dates to different workers or groups of workers. For example, an employer cannot use one re-enrolment date for paid monthly salaried workers and a different re-enrolment date for weekly paid workers the same date applies to all the workers included in the assessment. continued... A detailed guide to Automatic enrolment for software developers 170

171 Data source: Automatic enrolment data Description of data The automatic re-enrolment date is also: the date from which active membership of a pension scheme must start for those eligible jobholders who are being automatically re-enrolled the start date of the joining window (the six week period during which automatic re-enrolment must be completed) the start date for the calculation of contributions due to the pension scheme for those eligible jobholders who are being automatically re-enrolled. This data item should be overwritten with the next cyclical automatic re-enrolment date on the expiry of the current data entry. When choosing their cyclical automatic re-enrolment date employers should be aware of the interaction with their re-declaration duty. Where an employer does not have any eligible jobholders to automatically re-enrol the deadline for declaration of compliance is at the end of the period of three years starting from when they provided the previous declaration of compliance or re-declaration information in relation to each if its PAYE schemes. This deadline may fall part way through the re-enrolment window. If the employer has chosen a cyclical automatic re-enrolment date after this deadline and then finds that they have no eligible jobholders to re-enrol they will have missed the deadline for re-declaration and be in breach of the duty. continued... A detailed guide to Automatic enrolment for software developers 171

172 Data source: Automatic enrolment data Description of data If an employer cannot be sure that they will have an eligible jobholder to automatically re-enrol, then to be able to comply with their re-declaration duty, the last date from which they can choose their cyclical automatic re-enrolment date is at the end of the period of three years starting from when they provided the previous declaration or re-declaration information. This will not be relevant to an employer who used postponement at their staging date for the maximum three months (see paragraphs 60 to 78 for further guidance). Subsequent six month windows in which the employer can choose their next cyclical automatic re-enrolment date start three months before the third anniversary of the employer s last cyclical automatic re-enrolment date and end three months after that third anniversary. A detailed guide to Automatic enrolment for software developers 172

173 Key The use of binary flags suggests one way of achieving the necessary function within the system. However, there may be other ways to achieve the same function. It is for developers to decide what is appropriate within their system(s). Note 1: References to pay reference period includes reference to either definition of pay reference period for the assessment of workers unless explicitly stated. Note 2: Date means the data is assumed to be in the format dd/mm/yyyy and is a valid date in the Gregorian calendar, although it is for individual systems to decide how dates are held internally. Some of the calculations listed below involve adding or subtracting a number of months to a particular date. Instructions for performing these calculations are provided below: When adding months Add the stated number of months, subtract one day and adjust the year value as necessary eg adding three months to 01/11/2011 and subtracting a day results in 31/01/2012 When subtracting months Subtract the required number of months, add one day and adjust the year value as necessary eg subtracting three months from 31/01/2012 and adding one day results in 01/11/2011. Note 3: Where an employer has multiple contracts of employment with an individual worker, the employer must consider and, where appropriate, seek advice on whether the employment relationship is of a single employment with services being performed across each of the contracts. See Detailed guidance no. 3 Assessing the workforce for more information. In such circumstances, the employer should aggregate the qualifying earnings for the totality of those employment contracts and all the duties apply only once to the worker (eg automatic enrolment, opt out etc). If an employer is of the view that each of the employment contracts with an individual is wholly separate, they must apply the duties separately in relation to each contract. For the purposes of assessing the earnings of workers with multiple employments for the same employer, the system will need to be instructed by the employer whether to aggregate the earnings or to treat them separately. This requirement is not affected by the requirement to aggregate for the purposes of National Insurance contributions. It does not necessarily follow that where an employer must aggregate earnings for the purposes of National Insurance they will also be obliged to do so under their pensions duties. Note 4: Developers using these routines should be aware of the two different definitions of pay reference period that may be used by their employer customers. Paragraphs 104 to 168 have more information. Note 5: Throughout these data items the deferral date (the end of the postponement period) corresponds to worker postponement + one day or eligible jobholder postponement + one day. A detailed guide to Automatic enrolment for software developers 173

174 Data source: Worker data Description of data B1 Start date of employment NB1: Where the employer entity changes for a worker as a result of a TUPE transfer, the new employer will have to undertake anew any of the automatic enrolment duties that arise (eg automatic enrolment, providing information) for that worker regardless of whether the previous employer had already fully discharged their pensions duties for the worker. In practical terms when applying the rules in this specification, for the purposes of automatic enrolment, a TUPE transfer has an effect similar to the starting of a new employment for that worker and so the rules should be applied by the new employer on that basis. Abbreviation used Employment_start Recommended field size Date B2 Date of birth (DoB) Abbreviation used DoB Recommended field size Date B3 Active member of qualifying pension scheme status It will be important for the system to record whether the worker is an active member of a qualifying pension scheme with that employer at any point in time. This is because if a worker is an active member of the scheme then the duties for automatic enrolment, re-enrolment and opt in do not apply. While the deduction of contributions may be a strong indicator of active pensions membership, it should be noted that: following automatic enrolment the deduction of contributions is likely to precede the formal creation of pensions membership administratively and not all pension schemes in use may be qualifying. If software developers choose to determine whether a worker is an active member of a qualifying pension scheme intrinsically by identifying workers who the pensions contributions are being calculated for, rather than seek external verification, they should be aware there may be instances when this indicator is inaccurate. Abbreviation used Memb_QPS_flag Recommended field size Y/N continued... A detailed guide to Automatic enrolment for software developers 174

175 Data source: Worker data Description of data NB1: Where a worker is already an active member of a qualifying pension scheme on or before the employers duty start date, we envisage that the memb_qps_flag will be set to Y immediately on or before this date. Where the worker ceases active membership of a QPS, this flag should revert back to N. Where the worker opts out or ceases membership of their own volition, the next time such a worker is an eligible jobholder after membership ceases the employer will have either an automatic enrolment or re-enrolment duty. Which one applies will depend on whether the worker ever met the criteria to be an eligible jobholder whilst an active member of the scheme that would have met the qualifying criteria. If they did, and they meet the eligible jobholder criteria again after they have ceased active membership, the employer will have a re-enrolment duty. If the worker never met the criteria to be an eligible jobholder whilst an active member of the scheme, then the first time that they do meet the criteria after membership has ceased, the employer will have an automatic enrolment duty. The employer can choose to use postponement to postpone that duty for a period of up to three months. B3A Date qualifying pension scheme joined If a jobholder or entitled worker is already an active member of a qualifying scheme on the assessment date, then many of the new duties do not apply. This data item records the date active membership of a QPS started primarily for those workers who are active members immediately before the employer s staging date. It may also be used to record active membership as a result of automatic enrolment, re-enrolment or opt in. If it is to be used to record active membership as a result of automatic enrolment, re-enrolment or opt in, then Memb_QPS_date is the latest of AE_date, care_date or Optin_enrolment_date for a worker. Abbreviation used Memb_QPS_date Recommended field size Date continued... A detailed guide to Automatic enrolment for software developers 175

176 Data source: Worker data Description of data We assume that where one or more pension scheme records are held for a worker, the system will already hold information about the effective dates (start and end dates) for that scheme. Therefore Memb_QPS_date will be the date that the worker first joined the existing qualifying pension scheme or where this date is not present a default date of [Duty_start one day] can be applied. B4 Worker subject to postponement period flag The employer is permitted to select a period of up to three calendar months following staging, the start of a worker s employment or the employer s first enrolment date (for a worker for whom the employer is using the transitional period for schemes with defined benefits), before considering whether automatic enrolment is due. Throughout these routines we assume the consideration of automatic enrolment is run every pay reference period. This flag would be set by the user to identify workers who the employer will use this postponement period for. This is because they can be excluded from automatic enrolment for the duration of the period, even if all other necessary conditions are met. The worker postponement period may only be applied at: the employer s staging date for any worker in employment on the staging date, or the worker s first day of employment for any worker starting employment after the staging date, or the day after the day with effect from which arrangements fall to be made under the transitional period for schemes with defined benefits. On the day after the expiry of the postponement period (this corresponds to the deferral date ), the employer must automatically enrol the worker, providing the worker still meets the age and earnings criteria. Abbreviation used Wor_postpone_flag Recommended field size Y/N continued... A detailed guide to Automatic enrolment for software developers 176

177 Data source: Worker data Description of data If the worker is not an eligible jobholder on the day after the expiry of a postponement period, they will not need to be automatically enrolled. The employer must continue to monitor their status on an ongoing basis. At the point when the worker next becomes an eligible jobholder the employer can choose to use an eligible jobholder postponement period (see B6). If they wish to use the worker postponement period, the employer is required to provide the worker with a notice explaining this to them within a specified deadline. Further information on the content of the notice, the deadline for providing it and how the notice may affect wider information duties is provided in section 3 of this guide and in the automatic enrolment Detailed guidance no. 3a Postponement. Developers referring to Detailed guidance no. 3a Postponement should note that worker postponement is a term only used in the software guidance where there is a need to separate out 3 of the four dates that postponement can be used at as there are different rules for these three dates. If the employer wishes to choose from the full range of options for the postponement period notice (which in turn affects future information giving duties) in practice the system will need to make an assessment of eligibility at staging or when a worker starts employment. Worker postponement can be used in respect of one worker, all workers or a group of workers. If using for a group of workers or all workers the employer must still send an individual notice to each worker they intend to postpone. Where the employer intends to use the postponement period for all workers, it may be that the employer would require this flag to default to Y. And default the length of the period (up to the maximum of three months) to the duration the employer desires. The status of the Wor_postpone_flag should be reverted to N with effect from Wor_postpone_end (see B5). continued... A detailed guide to Automatic enrolment for software developers 177

178 Data source: Worker data Description of data NB1: It is possible for a worker to have worker postponement at the employer s staging date (where the staging date is not the employer s first automatic enrolment date), then become subject to the DB phasing period and then have postponement at the end of the DB phasing period. NB2: Postponement is not available at automatic re-enrolment. B5 End-date for Wor_postpone_flag Where the Wor_postpone_flag has been set to Y, it will be important for the system to know when a worker s postponement period ends as, if all other necessary conditions are met, the worker would fall to be automatically enrolled with effect from the following day (this corresponds to the deferral date). The deferral date will be the automatic enrolment date where the postponement period has been used and the eligible jobholder criteria are met on this date. In order to ensure the employer does not apply a postponement period longer than the permitted period of three calendar months, the system should validate Wor_postpone_end as follows: Wor_postpone_end must be the later of [Duty_start + three calendar months] OR [Employment_start + three calendar months] OR [DB phasing end + one day + three calendar months] If the system sets the Wor_postpone_flag to Y by default then Wor_postpone_end may need to be calculated by a user-determined rule rather than an input date (eg the employer could stipulate that the postponement period should end on the final day of the second future pay reference period). The status of the Wor_postpone_flag should be reverted to N with effect from the day following Wor_postpone_ end. Abbreviation used Wor_postpone_end Recommended field size Date continued... A detailed guide to Automatic enrolment for software developers 178

179 Data source: Worker data Description of data If, on the day after the expiry of the worker postponement period (this corresponds to the deferral date), the worker meets all the criteria to be an eligible jobholder, the employer must automatically enrol them with immediate effect, they cannot use a further postponement period of either type. NB1: The postponement period can be used by the employer to ensure all instances of automatic enrolment take place with effect from the start of a pay reference period, avoiding the need to calculate part-period contributions on a pro-rata basis. If they wish to do this, the employer may need to set up a rule to instruct the system to define the end-date for the postponement period to be the last day of a subsequent pay reference period so that automatic enrolment would take effect from the start-date of the next whole period. NB2: The postponement period can also be used by employers to avoid the automatic enrolment date falling close to the end of the tax year, which could result in opt outs and refunds of contributions made in the following tax year. To achieve this, the employer-user would need to select an end-date for the postponement period to prevent the opt-out period spanning across the tax year boundary. B6 Eligible jobholder to be subject to postponement period flag The employer is permitted to select a period of up to three calendar months following the point when the worker meets the age and earnings criteria to be eligible for automatic enrolment (ie when they become an eligible jobholder, see C11) before considering whether automatic enrolment is due. Throughout these routines we assume the consideration of automatic enrolment is run every pay reference period. This flag would be set by the user to identify workers who the employer will use this postponement period for. This is because they can be excluded from automatic enrolment for the duration of the period, even if all other necessary conditions are met. Abbreviation used EJ_postpone_flag Recommended field size Y/N continued... A detailed guide to Automatic enrolment for software developers 179

180 Data source: Worker data Description of data The eligible jobholder postponement period may only be applied at the date the worker meets the criteria to be an eligible jobholder. On the day after the expiry of the postponement period (this corresponds to the deferral date ), the employer must automatically enrol the worker, providing the worker still meets the age and earnings criteria. If the worker is not an eligible jobholder on the day after the expiry of a postponement period, they will not need to be automatically enrolled. The employer must continue to monitor their status on an ongoing basis. At the point when the worker next becomes an eligible jobholder the employer can choose to use an eligible jobholder postponement period (see C11A). At the point when the worker next becomes an eligible jobholder (EJ_ repeat_date), the employer can choose to use a further eligible jobholder postponement period (see C11A). This pattern can be repeated. In other words, providing the worker is not an eligible jobholder on the day after the expiry of a postponement period, another eligible jobholder postponement period can be applied at the point when they next become an eligible jobholder (see C11A). The potential repetition of the postponement period suggests that the eligible jobholder postponement period flag will need to be date-stamped. If they wish to use the eligible jobholder postponement period, the employer is required to provide the worker with a notice explaining this to them within a specified deadline. Further information on the content of the notice, the deadline for providing it and how the notice may affect wider information duties is provided in section 3 of this guide and in the automatic enrolment Detailed guidance no. 3a Postponement. Developers referring to Detailed guidance no. 3a Postponement should note that eligible jobholder postponement is a term only used in the software guidance where there is a need to separate out one of the dates that postponement can be used at as there are different rules on this one date. continued... A detailed guide to Automatic enrolment for software developers 180

181 Data source: Worker data Description of data The employer may not use the eligible jobholder postponement period while the worker is already subject to the worker postponement period (ie where Wor_ postpone_flag is Y). Equally the employer may not use an eligible jobholder postponement period immediately following the worker postponement period. However, if the deferral date is the last day of a pay reference period and the worker is not an eligible jobholder on the deferral date, eligible jobholder postponement can be used the next time that the worker meets the eligible jobholder criteria. So, if the assessment in the next pay reference period,which is the first day of that next pay reference period, identifies that they are an eligible jobholder postponement can be applied. This flag would be set by the user to identify eligible jobholders for whom the employer wishes to use the eligible jobholder postponement period, so they can be excluded from automatic enrolment. As the worker would otherwise fall to be automatically enrolled and have contributions deducted in the same period that the system first identifies they are an eligible jobholder, this flag will either need to be: set up to turn to Y automatically if/when the worker becomes an eligible jobholder for the first time if the employer intends to use the postponement period or set by a user at the point when payroll is run before net pay and deductions for that worker can be calculated. The status of the EJ_postpone_flag should be reverted to N with effect from EJ_postpone_end (see B7). NB1: The postponement period can be used by the employer to ensure all instances of automatic enrolment take place with effect from the start of a pay reference period, avoiding the need to calculate part-period contributions on a pro-rata basis. If they wish to do this, the employer may need to set up a rule to instruct the system to define the end-date for the postponement period to be the last day of a subsequent pay reference period so that automatic enrolment would take effect from the start-date of the next whole period. continued... A detailed guide to Automatic enrolment for software developers 181

182 Data source: Worker data Description of data NB2: The postponement period can also be used by employers to avoid the automatic enrolment date falling close to the end of the tax year, which could result in opt outs and refunds of contributions made in the following tax year. To achieve this, the employer-user would need to select an end-date for the postponement period to prevent the opt-out period spanning across the tax year boundary. NB3: It is not possible for a worker to be subject to the worker postponement period and the eligible jobholder postponement period at the same time. This means that wherever Wor_postpone_flag = Y, EJ_postpone_flag must NOT be Y. NB4: Postponement is not available at automatic re-enrolment. B7 End-date for EJ_postpone_flag Where the EJ_postpone_flag has been set to Y, it will be important for the system to know when the eligible jobholder postponement period ends as, if all other necessary conditions are met, the worker would fall to be automatically enrolled with effect from the following day (this corresponds to the deferral date). The deferral date may be used to determine the automatic enrolment date where the postponement period has been used and the eligible jobholder criteria are met on this date. To ensure the employer does not apply an eligible jobholder postponement period longer than the permitted period of three calendar months, the system should validate EJ_postpone_end as follows: EJ_postpone_end must be the later of [EJ_date + three calendar months] OR [latest instance of EJ_repeat_ date + three calendar months] If the EJ_postpone_flag has been turned to Y automatically (see B6) then, unless there is additional user-input at that point, EJ_postpone_end will need to be set by a user-determined rule rather than an input date (eg the employer could stipulate that the eligible jobholder postponement period should end on the final day of the second future pay reference period). Abbreviation used EJ_postpone_end Recommended field size Date continued... A detailed guide to Automatic enrolment for software developers 182

183 Data source: Worker data Description of data The status of the EJ_postpone_flag should be reverted to N with effect from the day following EJ_postpone_end. If, on the day after the expiry of the eligible jobholder postponement period (this corresponds to the deferral date ), the worker meets all the criteria to be an eligible jobholder, the employer must automatically enrol them with immediate effect, they cannot use a further postponement period of either type. NB1: The postponement period can be used by the employer to ensure all instances of automatic enrolment take place with effect from the start of a pay reference period, avoiding the need to calculate part-period contributions on a pro-rata basis. If they wish to do this, the employer would need to set up a rule to instruct the system to define the end-date for the postponement period to be the last day of a subsequent pay reference period. This is so automatic enrolment would take effect from the start-date of the next whole period. NB2: The postponement period can also be used by employers to avoid the automatic enrolment date falling close to the end of the tax year, which could result in opt outs and refunds of contributions made in the following tax year. To achieve this, the employer user would need to select an end-date for the postponement period to prevent the opt-out period spanning across the tax year boundary. A detailed guide to Automatic enrolment for software developers 183

184 Data source: Worker data Description of data B8 Transitional period for schemes with defined benefits applies to worker When they first become subject to the duties, an employer with a qualifying DB scheme or qualifying hybrid scheme with defined benefits may delay automatic enrolment for workers that meet specified conditions until the end of a transitional period, even if they would otherwise fall to be automatically enrolled. The conditions that the worker must meet are that: a. They are an eligible jobholder on the employer s first enrolment date b. That they have been employed by the employer for a continuous period before the first enrolment date c. Prior to the employer s first enrolment date for any worker, the worker is able to join a qualifying pension scheme with defined benefits if they choose to do so and remains entitled to join a qualifying pension scheme with defined benefits d. The pension scheme with defined benefits or schemes to which the worker is able to join remain a qualifying scheme for the remainder of the transitional period. If they wish to use the transitional period for schemes with defined benefits, the employer must provide the worker with a notice explaining this to them within six weeks of the employer s first enrolment date. Abbreviation used DB_flag Recommended field size Y/N continued... A detailed guide to Automatic enrolment for software developers 184

185 Data source: Worker data Description of data As the status of this flag relies on the worker s ability to join a DB pension scheme or the DB benefits within a hybrid pension scheme and the employer s commitment to eventually automatically enrol them into such a scheme, it is expected this would be a user-determined flag and is likely to be set manually. It should be set back to N at the end of the transitional period. If the conditions in C and D above continue to be met, on expiry of the transitional period, the worker, providing they meet the necessary criteria for automatic enrolment, must be automatically enrolled so that they become either: a. an active member of an automatic enrolment pension scheme which is a defined benefits scheme, or b. a defined benefits member of an automatic enrolment pension scheme which is a hybrid scheme. The employer can also choose to use postponement for a period of up three calendar months at the end of the transitional period. Following the end of the transitional period for schemes with defined benefits (DB_phasing_end + one day (see A5)) this flag must be set to N for all workers. This is so they fall to be treated as eligible jobholders where all the other necessary conditions are met and are then automatically enrolled into either a) or b) above or become subject to a postponement period. NB1: The employer s first enrolment date is the first day on which any of the employer s workers meet the eligible jobholder criteria. This is likely to be their staging date but may be later. For this reason where the employer is using worker postponement at their staging date and intend also to use the transitional period for schemes with defined benefits, in practice the system will need to make an assessment of eligibility at every pay reference period during the postponement period. continued... A detailed guide to Automatic enrolment for software developers 185

186 Data source: Worker data Description of data NB2: If the conditions in C and D above stop applying during the transitional period, so the worker ceases to be entitled to join a qualifying scheme with defined benefits during the transitional period or the scheme with defined benefits stops being a qualifying scheme during the transitional period, the DB_flag changes from Y to N before DB_phasing_end. The employer will need to take corrective action as the duty to automatically enrol will apply from the date that the conditions no longer apply. In addition, if the employer s first enrolment date is after 19 December 2012 and before the proposed amendments in the Pensions Bill take effect, and the employer uses the transitional period where the jobholder only has an entitlement to join the money purchase benefits in a qualifying hybrid scheme, the employer will be required to take the same corrective action. The detailed arrangements that an employer must follow are not detailed here as these are considered to be exceptional circumstances (for more information please see the automatic enrolments Detailed guidance no. 3b Transitional period for schemes with defined benefits). It may be appropriate for the system to produce a warning message when DB_flag changes from Y to N before DB_phasing_end. B9 B10 Intentionally blank Date valid opt-out notice given to employer Following automatic enrolment, re-enrolment or opt in, a jobholder is able to opt out within a specified period. The legislation sets out criteria for an opt-out notice to be valid and it is for the employer to assess the validity of the notice. Following opt out, all contributions must cease and the employer is obliged to refund to the jobholder the full value of any pensions contributions deducted since the latest instance of automatic enrolment, re-enrolment or opt in (adjusted for PAYE if necessary). Abbreviation used OptOut_date Recommended field size Date continued... A detailed guide to Automatic enrolment for software developers 186

187 Data source: Worker data Description of data It is important for the system to understand when the opt-out notice was given to the employer. This is because the date is used to determine the deadline by which the refund must be made (defined at C17) and also whether a worker should be automatically re-enrolled (for cyclical automatic re-enrolment). NB1: In this guide the term opt out specifically refers to the case where a worker decides to opt out of a pension scheme under the new duties. They can only opt out following automatic enrolment, re-enrolment or opt in during the opt-out period. When someone opts out, they are treated as never being a member of the pension scheme and all contributions must be refunded by law. Once the opt-out period has expired, a worker is still able to choose to cease active membership and stop contributing to their pension scheme. This may or may not result in the refunding of contributions depending on the pension scheme rules and the duration of pension scheme membership. Developers should note that the Pensions Bill 2013 proposes amendments to legislation to remove the ability to make a refund of contributions ( short service refund ) to members who give up their membership within two years. NB2: A jobholder is only able to opt out and receive a contributions refund under the employer duties during the opt-out period. The start and end dates of the optout period are defined at E3 and E4. As the exact start and end dates for the opt-out period are determined by reference to the later of the giving of information to the worker and the pension scheme creating active membership, user input is likely to be needed if the payroll system is to fully validate that OptOut_date falls within the opt-out period. If developers wish to undertake partial validation without external input, the latest possible end date for the opt-out period by law is [six weeks plus six weeks] from the latest instance of Cont_date. continued... A detailed guide to Automatic enrolment for software developers 187

188 Data source: Worker data Description of data However, if the employer completes the administrative steps of automatic enrolment very quickly, the earliest possible end date for the opt-out period by period is six weeks from the latest instance of Cont_date so developers should be aware that this is only an approximate validation. NB3: Following opt out or the termination of active membership (see B11 below), the employer is not obliged to continue to make employer pension contributions for the worker concerned. NB4: As a worker can opt out following automatic enrolment, re-enrolment or enrolment (opt in) OptOut_ date should be overwritten so that the last valid OptOut_ date is recorded. B11 Date qualifying pension scheme active membership voluntarily terminated by worker It will be important for the system to record when a worker chooses to stop contributing to their pension scheme after the opt-out period has expired. This is because the employer is not required to automatically reenrol jobholders who have chosen to stop contributing to a qualifying pension scheme within 12 months prior to the re-enrolment date. When a worker voluntarily stops contributing (after the opt-out period has expired) there are no new requirements for when the contributions must cease. The payroll system should respond to an instruction to stop. NB1: A worker can choose to reduce the contributions payable under the pension scheme. Where they do so and it is below the minimum contribution requirement the date that contributions reduce should be recorded here. This is because active membership of a qualifying scheme has voluntarily ceased. Active membership of a non-qualifying scheme and the calculation and deduction of contributions may continue. NB2: A worker may decide to cease active membership of a qualifying scheme following automatic enrolment, re-enrolment or enrolment (opt in). As is the case in B11 above End_pension_date should be overwritten so that the last valid End_pension_date is recorded. Abbreviation used End_pension_date Recommended field size Date A detailed guide to Automatic enrolment for software developers 188

189 Data source: Worker data Description of data B12 B13- B14 B15 B16 Date active membership of a pension scheme to be started following worker joining notice A worker who is not an eligible or non-eligible jobholder has the right to ask to join a pension scheme. After receiving this request, the employer is obliged to put the worker into a scheme that attracts tax relief and make deductions from pay (for a personal pension). There are no further scheme requirements about minimum member or employer contributions. The employer must keep records of the notice itself, the date active membership of a scheme was achieved, and earnings and pensions contributions from that date. It is important for the payroll system to record this date in order to commence the deduction of contributions, according to the rules of the employer s chosen pension scheme. If the scheme is a qualifying scheme then a value in B3A may be added instead or in addition. Intentionally blank Pension scheme rules to be applied to worker In order for the payroll system to be able to deduct the correct pensions contributions with immediate effect from the automatic enrolment date, the employer will need to have allocated a qualifying pension scheme to each worker in advance and informed the payroll system of the associated contribution rules to apply to the worker in the event that they are automatically enrolled. End date of employment This is the date on which a worker ceases to be employed under a worker s contract with the employer ie it is the last day of the contractual relationship. Once this date has passed, ie the day after employment_end, the employer will no longer have any new duties in respect of the worker. Abbreviation used Worker_join_date Recommended field size Date Abbreviation used N/A Recommended field size N/A Abbreviation used Employment_end Recommended field size Date continued... A detailed guide to Automatic enrolment for software developers 189

190 Data source: Worker data Description of data In practical terms this means that automatic enrolment should only take place if the assessment date for the worker is prior to or on the last day of their employment. It will not be necessary to assess the worker in pay reference periods which start after the last day of employment. B17 Date valid pension notice received Any worker (aged 16 or more and less than 75) under the new legislation can ask their employer to be made an active member of a pension scheme. Workers with an eligible jobholder or non-eligible jobholder status (see C10 and C12), who are not already members of a qualifying pension scheme regardless of whether they are subject to a postponement period, are permitted to give notice to the employer that they wish to opt in to a qualifying pension scheme. A worker who has an entitled worker status has the right to join a pension scheme. Following receipt of a valid notice, the employer needs to determine whether the worker is a jobholder and the notice is therefore an opt-in notice or whether the worker is an entitled worker and the notice is a therefore a joining notice. This is key as it determines the action the employer needs to take. Even if the worker has completed a standard opt-in or joining notice or indicated that it is one or the other the employer should validate that it is the correct notice. The employer should check the worker s status at the point in time they were given the notice. If on this assessment date, the worker is a jobholder (eligible or non-eligible jobholder) and they are not already an active member of a qualifying pension scheme, they must be put into an automatic enrolment pension scheme using the automatic enrolment process with effect from the opt-in enrolment date (see C15). This is because the employer has identified that they have received an optin notice. Abbreviation used Pension_notice_date Recommended field size Date continued... A detailed guide to Automatic enrolment for software developers 190

191 Data source: Worker data Description of data If on the date they were given the notice, the worker has an entitled worker status, they must be made an active member of a pension scheme. This is because the employer has identified that they have received a joining notice. The employer is obliged to put the entitled worker into a scheme that attracts tax relief and make deductions from pay (for a personal pension scheme). The pension scheme is not required to be a qualifying pension scheme. There are no further scheme requirements about minimum member or employer contributions. The employer is not obliged to respond to more than one opt-in notice in a rolling 12 month period from any single jobholder but may do so, if they wish. The rolling 12 month period starts from the date of an opt-in notice. For example, if a worker gives an opt-in notice on 1 January 2013, is enrolled into a scheme, then ceases membership but gives another opt-in notice in the period up to 31 December 2013 then the employer does not have to arrange active membership following receipt of the second opt-in notice. If the worker gives an opt-in notice on 1 January 2014 then they must enrol them. This is the start of the next 12 month period. If a worker gives a joining notice during this period the employer must arrange active membership of a pension scheme. If a worker is automatically enrolled on 1 January 2013, ceases membership and gives the employer an opt-in notice on 1 April, the employer must enrol them. The rolling 12 month period starts from 1 April which is the date of the receipt of the opt-in notice. If a worker gives a joining notice during this period the employer must arrange active membership of a pension scheme. The employer is also not obliged to respond to more than one joining notice in a rolling 12 month period from any single jobholder but may do so, if they wish. The rolling 12 month period starts from the date of a joining notice. If a worker gives an opt-in notice during this period the employer must arrange active membership of an automatic enrolment scheme. continued... A detailed guide to Automatic enrolment for software developers 191

192 Data source: Worker data Description of data Where the employer wishes to limit opt in or joining, in this way, the system would need to be configured accordingly. The employer must keep records of the notice itself, the date active membership of a scheme was achieved, and earnings and pensions contributions from that date. A detailed guide to Automatic enrolment for software developers 192

193 2.6 Calculation routines Key The use of binary flags suggests one way of achieving the necessary function within the system. However, there may be other ways to achieve the same function. It is for developers to decide what is appropriate within their system(s). Note 1: References to pay reference period includes reference to either definition of pay reference period for the assessment of workers unless explicitly stated. Note 2: Date means the data is assumed to be in the format dd/mm/yyyy and is a valid date in the Gregorian calendar, although it is for individual systems to decide how dates are held internally. Some of the calculations listed below involve adding or subtracting a number of months to a particular date. Instructions for performing these calculations are provided below: When adding months Add the stated number of months, subtract one day and adjust the year value as necessary eg adding three months to 01/11/2011 and subtracting a day results in 31/01/2012. When subtracting months Subtract the required number of months, add one day and adjust the year value as necessary eg subtracting three months from 31/01/2012 and adding one day results in 01/11/2011. Note 3: Developers should take particular note of NB2 and NB3 in C12 and C13 which highlight a scenario where the routines described will return an anomalous result Note 4: Throughout these routines the deferral date (the end of the postponement period) corresponds to worker postponement + one day or eligible jobholder postponement + one day Data source: System-derived Description of data C1 C2 22nd birthday This is the date the worker becomes 22 years of age. State Pension Age date This is the date the worker reaches their state pension age. Payroll systems are likely to already use a worker s state pension age to determine whether the worker is still liable for Class 1 National Insurance contributions. Abbreviation used 22_date Recommended field size Date Abbreviation used SPA_date Recommended field size Date continued... A detailed guide to Automatic enrolment for software developers 193

194 Data source: System-derived Description of data A table summarising the changes to State Pension Age can be found on the DWP s website: government/publications/state-pension-age-timetable C3 C4 C5 16th birthday This is the date the worker becomes 16 years of age. 75th birthday This is the date the worker becomes 75 years of age. Start date of the Pay Reference Period The period an employer must use to assess their worker s earnings is the pay reference period. From 1 November 2013 there are two definitions of a pay reference period in legislation and an employer will be able to choose which definition they wish to adopt as the period to assess their worker s earnings. One definition of pay reference periods is aligned to tax weeks or months and one is aligned to the period by reference to which a person is paid their regular wage or salary. Employers with staging date of 1 November 2013 and later can choose which one of the definitions they wish to use for the application of their duties. (Employers with a staging date before 1 November 2013 will be using the definition of pay reference periods aligned to the period by reference to which a person is paid their regular wage or salary but can choose to change to using the definition aligned to tax weeks or months from 1 November 2013.) Abbreviation used 16_date Recommended field size Date Abbreviation used 75_date Recommended field size Date Abbreviation used PRP_start Recommended field size Date continued... A detailed guide to Automatic enrolment for software developers 194

195 Data source: System-derived Description of data 1. Definition aligned to tax weeks or months A worker s pay reference period is: a. equal in length to the usual interval between payments of the person s regular wage or salary, or b. a week whichever is the longer. The usual interval between payments of the person s regular wage or salary sets the length of the pay reference period unless those intervals are of less than a week in which case the length of the pay reference period is one week. The pay reference period starts on 6 April each year and: every tax week after 6 April, where the worker is weekly paid (or treated as weekly paid as the length of the pay reference period is one week) every start of a tax month after 6 April, where the worker is paid monthly the first day of the tax week which commences immediately after the expiry of a pay interval period beginning on 6 April, where the usual interval between payments of regular wage or salary is a multiple of weeks the first day of the tax month which commences immediately after the expiry of a pay interval period beginning on 6 April, where the usual interval between payments of regular wage or salary is a multiple of months. (A pay interval period is defined under the legislation as a period equal in length to the usual interval between payments of the worker s regular wage or salary and each whole multiple of that period.) The pay reference period calendars for weekly, fortnightly (two weeks), four-weekly, monthly, quarterly (three calendar months), bi-annual (six calendar months) and annual usual intervals between payments of regular wage or salary can be found at Annex A. continued... A detailed guide to Automatic enrolment for software developers 195

196 Data source: System-derived Description of data If the length of the pay reference period is not one of these it will have to be derived. The first pay reference period starts on 6 April. The first pay interval period is the first multiple of the period equal in length to the usual interval between payments of the regular wage or salary and starts on 6 April. The next pay reference starts on the first day of the tax week or month (as relevant) which commences immediately after the expiry of this pay interval period. The next pay interval period is the next multiple of the period equal in length to the usual interval between payments of the regular wage or salary and starts on 6 April. The next pay reference period starts on the first day of the tax week or month (as relevant) which commences immediately after the expiry of this pay interval period. For example, if the usual interval between payments of regular wage or salary is five weeks, then a pay interval period in this case is a period equal in length to five weeks and each whole multiple of a five week period. In this case the first pay reference period starts on 6 April and lasts for the first pay interval period of five weeks ending on 10 May. The first day of the tax week after 10 May is 11 May (the start of tax week 6). The next pay reference period starts on the first day of the tax week after the expiry of a pay interval period starting on 6 April and lasting the next multiple of five weeks. The next multiple of a five week period is a 10 week period. A 10 week period that starts on 6 April ends on 14 June. The first day of a tax week that starts after 14 June is 15 June (the start of tax week 11). Where a pay reference period includes the 5 April the next pay reference period starts on 6 April. This means that there may be overlapping pay reference periods at the change in the tax year. However, if in the last pay reference period of the outgoing tax year the qualifying earnings payable in this PRP are paid or payable on or after 6 April, that last pay reference period is ended on 5 April. As no qualifying earnings are payable in a shortened last pay reference period of the tax year, workers will be entitled workers. continued... A detailed guide to Automatic enrolment for software developers 196

197 Data source: System-derived Description of data If this is the first time that a worker meets the entitled worker criteria and the employer has not given the worker information about their right to join, the employer must give the information about the right to join within six weeks of the right first applying (ie the start of the last pay reference period of the tax year). In these circumstances an employer will still need to know of this pay reference period even though their qualifying earnings are not payable. If in the last pay reference period of the outgoing tax year the qualifying earnings payable in this PRP are paid or payable before 6 April, the pay reference period is not ended and runs alongside the first pay reference period of the next tax year. See paragraphs 104 to 153 in the further guidance part of this section for more background on this definition of pay reference periods. 2. Definition aligned to period by reference to which a worker is paid A worker s pay reference period is: one week, in the case of a worker who is paid their regular wage or salary by reference to a period of a week, or in the case of a worker who is paid their regular wage or salary by reference to a period longer than a week, whichever period the worker is paid by reference to. For example, for a person paid by reference to a monthly period, the pay reference period will be one month. The pay reference period, under this definition, is not the interval between the dates the worker actually receives their pay. Understanding by reference to what period of time an employer is paying a worker is key to identifying pay reference periods. continued... A detailed guide to Automatic enrolment for software developers 197

198 Data source: System-derived Description of data An employer should consider in respect of which period of time their payroll operates. For example, if they collate hours worked on a four-weekly basis and pay in respect of those hours worked every four weeks, their pay reference period will be four-weekly. It does not matter if the employer pays in arrears. The employer is identifying the general period of time by reference to which they pay. See paragraphs 154 to 168 in the further guidance part of this section for more background on this definition of pay reference periods. We envisage that the user, when using this definition of pay reference periods will be required to carry out initial set up of the system to pre-determine the current pay reference period and future pay reference periods. Developers may be able to derive the next instances of PRP_start and PRP_end for the forthcoming tax year after that. NB1: Under either definition of pay reference periods, developers and users will need to have an accurate understanding of pay reference periods. If a system does not recognise the start and end dates of each pay reference period, it will be important for the employer to understand this, so they can make sure alternative arrangements are in place to remain compliant. NB2: Under either definition of pay reference periods, where an employer pays their workers in arrears and the payroll calculation happens to be performed before the start of the pay reference period in which the calculated earnings become payable, care should be taken to ensure that the system identifies the correct values for PRP_start and PRP_end (see C6 below) for the purpose of the calculations at C7-9, C11 and C17. A detailed guide to Automatic enrolment for software developers 198

199 Data source: System-derived Description of data NB3: Under either definition of pay reference periods, the employer has six weeks from the automatic enrolment date in which to complete the administrative steps of automatic enrolment. Where pay reference periods are longer than six weeks for example quarterly, manual intervention by the employer will be required with the system validating the assumptions made by the employer and taking a deduction (see paragraphs 353 to 357 of the further guidance part of this section and E1). NB4: Where an employer decides to change from one definition of pay reference periods to another, they should be aware that when they enter the start date of the new pay reference periods to set the new calendar or if the system defaults to the new calendar that there will be a period where the there are two overlapping pay reference periods. For example, an employer with a monthly PRP starting on the first day of the month decides to change to the tax month definition from June. So in June there is one pay reference period (under the old definition) of 1 to 30 June and one pay reference period (under the new definition) of 6 June to 5 July. Where a pay date falls within the period of the overlap ie between 6 June and 30 June two individual assessments will be required: one for the pay reference period of 1 to 30 April and one for the pay reference period of 6 April to 5 May. The previous pay reference period calendar can only be discontinued in the system after this initial transition from one definition to another. For more guidance please see paragraphs 210 to 221. C6 End date of the Pay Reference Period (see C5 above). Abbreviation used PRP_end Recommended field size Date continued... A detailed guide to Automatic enrolment for software developers 199

200 Data source: System-derived Description of data C7 Total earnings payable in Pay Reference Period To be calculated by summing the earnings components payable between PRP_start and PRP_end inclusive. Earnings components to be included in this sum: Salary; wages; commission; bonus; overtime; statutory sick pay; statutory maternity pay; statutory paternity pay (ordinary or additional); and statutory adoption pay. NB1: This is an exhaustive list; there are no further additions or omissions. These terms rely on common usage definitions. It is for the employer to determine if a payment they are making falls into one of the components of pay that make up qualifying earnings. NB2: The system must consider what is payable (ie due to be paid) in the pay reference period, irrespective of the period that the payment relates to (eg if a bonus is due to be paid in March in relation to performance in January, then this is included in the earnings to be assessed in March, not January). The requirement to consider what is payable or due to be paid in a pay reference period may have wider implications for handling advances of pay and backdated pay. Where an advance of pay takes place purely for practical or administrative purposes rather than as a requirement under the worker s contract, then the advanced earnings should continue to be assessed in the future pay reference periods in which they are payable rather than in the period in which, for administrative purposes only, they are paid. For example where a weekly paid worker is paid an additional week s worth of advanced pay to cover a forthcoming holiday period but this is not a contractual agreement, then the advanced earnings should be assessed as payable during the week that the worker is on holiday. In this way, an administrative arrangement for a double payment for a low earner will not increase the likelihood of that worker earning above the threshold values and potentially falling to be automatically enrolled. Abbreviation used SUM_PRP Recommended field size xx,xxx,xxx.xx continued... A detailed guide to Automatic enrolment for software developers 200

201 Data source: System-derived Description of data When handling backdated pay, care will need to be taken to understand when, under the worker s contract, the backdated amount is actually payable. If the contract states that variable payments such as overtime, bonuses or pay awards are payable at a particular point in time, then irrespective of when the payments are actually processed and paid, they should be considered at the point when they were payable. If, however, under the contract variable payments are simply due at the point they are processed/paid/agreed, then they will only need to be considered at this point. For example where under their contract a monthlypaid worker is entitled to receive overtime worked in January in their February pay, even if there is a delay in processing the overtime meaning the overtime is not paid until March, the amount should still be considered as part of the total earnings in the February pay reference period. It is recognised that where there is a significant lag between a payment becoming due under the contract and it being paid, this would require the employer to re-calculate the earnings payable across a number of pay reference periods and may, in marginal cases, identify workers who have not been automatically enrolled on time. In such cases, employers will need to take reasonable corrective action to address these breaches. NB3: As the system must consider what is payable, this means that if any errors are made eg underpayments or overpayments the amounts due must be assessed in the pay reference period they ought to have been paid in. Similarly if an employer runs supplementary payroll runs (that are not correcting errors) this must be included in the pay reference period it is payable in (see paragraph 374 in the further guidance part of this section). C8 Qualifying Earnings payable in Pay Reference Period In order to assess whether a worker has qualifying earnings in any Pay Reference Period, the appropriate value of QE_LT and QE_UT should be selected for the period in use (see A2 and A3). Abbreviation used QE_PRP Recommended field size xx,xxx,xxx.xx continued... A detailed guide to Automatic enrolment for software developers 201

202 Data source: System-derived Description of data The calculation is then as follows: QE_PRP = the lower of: [SUM_PRP QE_LT] OR [QE_UT QE_LT] If QE_PRP > then the worker has qualifying earnings for the purposes of the employer duties. C9 C10 Earnings above the automatic enrolment trigger in PRP In order to assess whether a worker has earnings above the automatic enrolment trigger in any pay reference period, the appropriate value of AE_trig should be selected for the period in use (see A4). The calculation is then as follows: AE_PRP = SUM_PRP AE_trig If AE_PRP > then the worker s earnings are sufficient to trigger automatic enrolment, providing the other necessary conditions are met (see C10 below). Eligible jobholder status The employer is obliged to automatically enrol workers who are, or become, eligible jobholders. Although the assessment of eligible jobholder status occurs every pay reference period it is important to remember that the calculation within the payroll system is still making the assessment as at a specific date as at the assessment date falling within the pay reference period. In systems this means looking at the age on the assessment date and calculating the qualifying earnings payable in the pay reference period within which the assessment date occurs. A worker is an eligible jobholder if: EJ_flag = Y IF Abbreviation used AE_PRP Recommended field size xx,xxx,xxx.xx Abbreviation used EJ_flag Recommended field size Y/N continued... A detailed guide to Automatic enrolment for software developers 202

203 Data source: System-derived Description of data [AGE ON latest of [[PRP_start OR Duty_start OR Employment_start OR 22_date OR Pension_notice_date OR [DB_phasing_end + one day] OR [Wor_postpone_ end + one day] OR [EJ_postpone_end + one day]] IF PRP_start AND earliest of [PRP_end OR Employment_ end OR SPA_date]] IF 22 AND < SPA] AND AE_PRP > 0 NB1: Certain events end eligibility. In this case employment end or reaching SPA date. Where either of these dates fall within a pay reference period and there is an assessment date or dates before them, the system must still make the assessment. C11 Date on which a worker first becomes an eligible jobholder The date on which a worker becomes an eligible jobholder for the first time is important. This is because it will determine the date when automatic enrolment, or the start of an eligible jobholder postponement period, must take place. This date therefore corresponds to the relevant assessment date in the pay reference period within which it falls. EJ_date is latest of [Duty_start OR Employment_start OR 22_date OR PRP_start] IF [AGE ON Latest of [Duty_start OR Employment_start OR 22_date OR PRP_start] IF PRP_start AND earliest of [PRP_end OR Employment_end OR SPA_date]] 22 AND <SPA* AND AE_PRP > 0 Abbreviation used EJ_date Recommended field size Date continued... A detailed guide to Automatic enrolment for software developers 203

204 Data source: System-derived Description of data EJ_date will depend on which was the last of the eligible jobholder criteria to be met. Eg if a worker met all other necessary conditions but was not yet 22 years old, EJ_ date will be the worker s 22nd birthday. C11 A Date on which worker first re-gains eligible jobholder status after being ineligible at the end of the previous postponement period If a worker is not an eligible jobholder on the day after the expiry of a postponement period, they will not need to be automatically enrolled. Thereafter the employer must continue to monitor their status on an ongoing basis. At the point when the worker next becomes an eligible jobholder (because their earnings exceed the automatic enrolment trigger value), the employer can choose either to automatically enrol the worker with immediate effect or use a further eligible jobholder postponement period. This data item denotes the point at which a worker first re-gains eligible jobholder status after being ineligible at the end of the previous postponement period. EJ_repeat_date = N IF EJ_flag is Y AND EJ_Deferral_date_status does not equal Y AND EJ_date < PRP_start AND AE_date is not present You cannot achieve an EJ_repeat_date if you have not yet achieved an EJ_date. Abbreviation used EJ_repeat_date Recommended field size Date A detailed guide to Automatic enrolment for software developers 204

205 Data source: System-derived Description of data C12 Non-eligible jobholder status There is a further category of workers non-eligible jobholders who are not automatically enrolled but who can opt in to an automatic enrolment pension scheme if they wish. There are two types of non-eligible jobholder: a. Workers aged between 16 and 22 or between state pension age and 75 who have earnings above the automatic enrolment trigger; and b. Workers aged 16 to 75 who have qualifying earnings that do not exceed the automatic enrolment trigger. Again the system is still making the assessment as at a specific date as at the assessment date falling within the pay reference period. A worker is a non-eligible jobholder if: JH_flag = Y IF [AGE ON latest of [[PRP_start OR Duty_start OR Employment_start OR 16_date OR 22_date OR SPA _date OR Pension_notice_date OR [DB_phasing_end + one day] OR [Wor_postpone_end + one day] OR [EJ_ postpone_end + one day]] IF PRP_start AND earliest of [PRP_end OR Employment_end OR 75_date]] IF 16 AND < 22] AND AE_PRP > 0 OR IF [AGE ON latest of [[PRP_start OR Duty_start OR Employment_start OR 16_date OR 22_date OR SPA _date OR Pension_notice_date OR [DB_phasing_end + one day] OR [Wor_postpone_end + one day] OR [EJ_ postpone_end + one day]] IF PRP_start AND earliest of [PRP_end OR Employment_end OR 75_date]] IF SPA AND < 75] Abbreviation used JH_flag Recommended field size Y/N continued... A detailed guide to Automatic enrolment for software developers 205

206 Data source: System-derived Description of data AND AE_PRP > 0 OR IF [AGE ON latest of [[PRP_start OR Duty_start OR Employment_start OR 16_date OR 22_date OR SPA_ date OR Pension_notice_date OR [DB_phasing_end + one day] OR [Wor_postpone_end + one day] OR [EJ_ postpone_end + one day]] IF PRP_start AND earliest of [PRP_end OR Employment_end OR 75_date]] IF 16 AND < 75] AND QE_PRP > 0 AND AE_PRP 0 NB1: Certain events end eligibility. In this case employment end or 75 date. Where either of these dates fall within a pay reference period and there is an assessment date or dates before them, the system must still make the assessment. NB2: Where SPA date falls part way through a pay reference period and a worker s earnings are above the earnings trigger for automatic enrolment, the data item here and in C10 will return EJ_flag = Y and JH_flag = Y in the same pay reference period. This is because the worker will be an eligible jobholder for part of the period up to SPA and a non-eligible jobholder for the part of the period from SPA. continued... A detailed guide to Automatic enrolment for software developers 206

207 Data source: System-derived Description of data NB3: Conversely where 22 date falls part way through a pay reference period and a worker s earnings are above the earnings trigger for automatic enrolment, the data item here and in C10 will return EJ_flag = Y and JH_flag = N in the same pay reference period. As the worker is a non-eligible jobholder for the period from the start of the pay reference period to immediately before the 22nd birthday JH_flag should = Y. The reason for this anomaly is that the latest assessment date for both the assessment of eligible jobholder and non-eligible jobholder status is 22 date. An employer will need to ensure that there other ways to identify the minority of cases where this occurs where the start of the PRP will also be the first time that non-eligible jobholder status is met. C12 A Date on which a worker first becomes a non-eligible jobholder Depending on whether the employer is using a postponement period and on which type of postponement period notice they provide (see section 3), the employer may be obliged to provide noneligible jobholders (both those who are and who are not active members of qualifying pension schemes) with information about their rights under the legislation. The deadlines for providing the relevant information are determined by when the worker first attained noneligible jobholder status. As with C11, this date corresponds to the relevant assessment date in the pay reference period. JH_date will depend on which was the last of the noneligible jobholder criteria to be met, eg if a worker met all other necessary conditions but was not yet 16 years old, JH_date will be the worker s 16th birthday. JH_date is latest of [Duty_start OR Employment_start OR 16_date OR SPA_date OR PRP_start] Abbreviation used JH_date Recommended field size Date continued... A detailed guide to Automatic enrolment for software developers 207

208 Data source: System-derived Description of data IF [AGE ON Latest of [Duty_start OR Employment_start OR 16_date OR SPA_date OR PRP_start] IF PRP_start AND earliest of [PRP_end OR Employment_end OR 75_date]] 16 AND <22 AND AE_PRP > 0 OR IF [AGE ON Latest of [Duty_start OR Employment_start OR 16_date OR SPA_date OR PRP_start] IF PRP_start AND earliest of [PRP_end OR Employment_end OR 75_date]] SPA AND <75 AND AE_PRP > 0 OR IF [AGE ON Latest of [Duty_start OR Employment_start OR 16_date OR SPA_date OR PRP_start] IF PRP_start AND earliest of [PRP_end OR Employment_end OR 75_date]] 16 AND <75 AND QE_PRP > 0 AND AE_PRP 0 A detailed guide to Automatic enrolment for software developers 208

209 Data source: System-derived Description of data C13 Entitled worker status There is a final category of workers, entitled workers, who are not automatically enrolled but who can join a pension scheme if they wish. There are fewer criteria for the pension scheme that the employer is obliged to use in such circumstances (please see B12). A worker is an entitled worker if: Wor_flag = Y IF [AGE ON latest of [[PRP_start OR Duty_start OR Employment_start OR 16_date OR Pension_notice_date OR [DB_phasing_end + one day] OR [Wor_postpone_ end + one day] OR [EJ_postpone_end + one day]] IF PRP_start AND earliest of [PRP_end OR Employment_ end OR 75_date]] IF 16 AND < 75] AND QE_PRP 0 NB1: Certain events end eligibility. In this case employment end or 75 date. Where either of these dates fall within a pay reference period and there is an assessment date or dates before them, the system must still make the assessment. NB2: Where SPA date falls part way through a pay reference period and a worker s earnings are above the earnings trigger for automatic enrolment, the data item here and in C10 will return EJ_flag = Y and Wor_flag = Y in the same pay reference period. This is because the worker will be an eligible jobholder for part of the period up to SPA and an entitled worker for the part of the period from SPA. Abbreviation used Wor_flag Recommended field size Y/N continued... A detailed guide to Automatic enrolment for software developers 209

210 Data source: System-derived Description of data NB3: Conversely where 22 date falls part way through a pay reference period and a worker s earnings are above the earnings trigger for automatic enrolment, the data item here and in C10 will return EJ_flag = Y and Wor_flag = N in the same pay reference period. As the worker is an entitled worker for the period from the start of the pay reference period to immediately before the 22nd birthday Wor_flag should = Y. The reason for this anomaly is that the latest assessment date for both the assessment of eligible jobholder and entitled worker status is 22 date. An employer will need to ensure that there other ways to identify the minority of cases where this occurs where the start of the PRP will also be the first time that entitled worker status is met. C13 A Date on which a worker first becomes an entitled worker Depending on whether the employer is using a postponement period and on which type of postponement period notice they provide (see section 3), the employer may be obliged to provide an entitled worker who is not a member of a qualifying pension scheme with information about their right to join a pension scheme under the legislation. The deadline for providing the relevant information is determined by when a worker first achieved an entitled worker status. Wor_date is latest of [Duty_start OR Employment_start OR 16_date OR PRP_start] IF [AGE ON latest of [Duty_start OR Employment_start OR 16_date OR PRP_start] IF PRP_start AND earliest of [PRP_end OR Employment_end OR 75_date]] 16 AND < 75 AND QE_PRP 0 Abbreviation used Wor_date Recommended field size Date A detailed guide to Automatic enrolment for software developers 210

211 Data source: System-derived Description of data C14 Automatic enrolment date The automatic enrolment date is the date from which membership of a qualifying pension scheme must be effective when an eligible jobholder is automatically enrolled. Unless the employer has chosen to use a postponement period, a worker s automatic enrolment date is the date on which they become an eligible jobholder for the first time. Where the employer has chosen to use a postponement period, the automatic enrolment date is the day after the end of the postponement period, assuming all other necessary conditions are met on that date. AE_date is the latest of [[EJ_date] OR [Wor_postpone_ end + one day] OR [EJ_postpone_end + one day] OR [DB_phasing_end + one day] OR [EJ_repeat_date ] IF latest of [PRP_start OR [Wor_postpone_end + one day] OR [EJ_postpone_end + one day] OR [DB_phasing_end + one day]] AND earliest of [PRP_end OR Employment_ end OR SPA_date]] AND EJ_flag = Y AND DB_flag = N AND Wor_postpone_flag = N AND EJ_postpone_flag = N The employer is obliged to start deducting contributions, as per the rules of the qualifying scheme in use, with immediate effect from the automatic enrolment date. It is important for payroll software to identify the automatic enrolment date, as a deduction of contributions will need to be made by the system at the same point as the automatic enrolment date is calculated. Abbreviation used AE_date Recommended field size Date continued... A detailed guide to Automatic enrolment for software developers 211

212 Data source: System-derived Description of data NB1: A worker can only be automatically enrolled once per employment. In order to ensure the system does not identify multiple automatic enrolment dates, once the automatic enrolment date has been identified, the system should be configured to prevent identifying any further instances of the automatic enrolment date. Once a worker has an automatic enrolment date, the employer need not consider them further until the cyclical automatic re-enrolment date unless the worker opts out or ceases active membership of their own volition and the employer has not discharged the information requirements to: a. give information to a jobholder about their right to opt in to an automatic enrolment scheme, or b. give information to an entitled worker about their right to join a pension scheme If the employer has not yet given this information to the worker they will need to continue to assess the worker after active membership has ceased. This is in order to identify the first time that the right to opt in to an automatic enrolment scheme and/or the first time that the right to join a pension scheme apply to the worker as they will be required to give the information in a) and/or b) above. C15 Opt-in enrolment date Both eligible and non-eligible jobholders who are not members of a qualifying pension scheme or not undergoing automatic enrolment are permitted to give notice to the employer that they wish to opt into pension saving (see B17). Where the employer has chosen to use a worker or eligible jobholder postponement period, the jobholder remains entitled to opt in during the postponement period. When the employer has received a notice and on the date they received the notice the worker was a jobholder they must follow the automatic enrolment process and create active membership with effect from the enrolment date. The enrolment date is the start date of active membership and the start date for the calculation of contributions. Abbreviation used OE_date Recommended field size Date continued... A detailed guide to Automatic enrolment for software developers 212

213 Data source: System-derived Description of data In the pay reference period after the one in which the notice was received, the employer must assess the status of the worker, unless the notice was received after payroll arrangements had closed for the next pay reference period. If as a result of this assessment the worker is a jobholder then the first day of the pay reference period is the enrolment date. If payroll arrangements have closed for the next pay reference period, then the assessment must take place in the second pay reference period after the notice was received. If as a result of this assessment the worker is a jobholder then the first day of this pay reference period is the enrolment date. If on either of this assessments the worker is not a jobholder, the employer must continue to make an assessment of the worker as at the first day of each pay reference period until jobholder status is met. The enrolment date is the first day of the pay reference period in which the jobholder criteria is met. See C32 for JH_OE_date, the pre-cursor to this calculation. [OE_date = PRP_start IF JH_OE_date is Present AND JH_OE_date PRP_start AND AGE ON PRP_start 16 AND <75 AND QE_PRP>0 AND Memb_QPS_flag = N AND Employment_end PRP_start] continued... A detailed guide to Automatic enrolment for software developers 213

214 Data source: System-derived Description of data NB1: Where the worker meets the eligible jobholder criteria before the enrolment date is reached then automatic enrolment takes precedence unless eligible jobholder postponement is used. NB2: It is possible for both an opt-in enrolment date and automatic enrolment date (see C14) to be the same date. It is also possible for both an opt in enrolment date and automatic re-enrolment date to be the same. C16 Commencement of contributions date The contributions date is the date from which the calculation and deduction of contributions must be made when: a. a jobholder is automatically enrolled, automatically re-enrolled or has opted in or b. when an entitled worker has given a worker joining notice. It is important to note that the employer is not obliged to calculate and deduct contributions according to any formula set out in the legislation. Instead, the employer is responsible for satisfying themselves that the pension scheme they intend to use meets a number of qualifying criteria, including, where relevant, a member entitlement equivalent to the minimum contribution level set out in legislation. Once the employer has examined the pension scheme and is satisfied it meets the qualifying criteria, then the contributions to be deducted and paid are determined by the rules of/agreements with the pension scheme itself. This means that the pension scheme may use qualifying earnings as its definition of pay. Or it may retain its existing definition of pensionable pay with no disregard of earnings (ie contributions due from the first pound of earnings). See paragraphs 222 to 311 for more background information. Abbreviation used Cont_date Recommended field size Date continued... A detailed guide to Automatic enrolment for software developers 214

215 Data source: System-derived Description of data The contributions date is the same date as the automatic enrolment date or the opt-in enrolment date or the worker join date or the automatic re-enrolment date if Re-enrolment_status_at_cARE_date = Y (see C30A), unless the scheme rules provide otherwise. For example a minimum requirement pension scheme where the definition of a pay reference period (contribution entitlement) is aligned to tax weeks or months or the period by reference to which the worker is paid their regular wage or salary. More information on a mimium requirement pension scheme can be found at paragraphs 232 to 237 of the further guidance part of this section. For a minimum contributions pension scheme with either of these definitions of a pay reference period, the first relevant pay reference period (contribution entitlement) is the first whole pay reference period (contribution entitlement) that starts on or after the date that the worker becomes both a jobholder and an active member of a qualifying scheme for the first time. This means that where active membership starts part way through a pay reference period, the contributions date is the first day of the pay reference period after the one in which active membership started. For more information see paragraphs 274 to 275 and associated examples (where the definition of a pay reference period is aligned to tax weeks or months) or paragraphs 299 to 300 and associated examples (where the definition of a pay reference period is aligned to the period by reference to which the worker is paid their regular wage or salary). There is no contributions date for workers who are already members of a qualifying pension scheme on duty start (although this item may be held in existing data items on a payroll system). continued... A detailed guide to Automatic enrolment for software developers 215

216 Data source: System-derived Description of data Where a worker has previously opted in to a qualifying pension scheme and has subsequently ceased active membership of that scheme and triggers an automatic enrolment date, the commencement of contributions date should be overwritten with effect from the automatic enrolment date (or start of the next pay reference period (for a minimum contribution pension scheme where the definition of a pay reference period (contribution entitlement) is not the 12 month period aligned to the employer s staging date). Where an eligible jobholder is automatically reenrolled, the commencement of contributions should be overwritten with effect from the automatic reenrolment date (or start of the next pay reference period (for a minimum contribution pension scheme where the definition of a pay reference period (contribution entitlement) is not the 12 month period aligned to the employer s staging date). Where an eligible jobholder is automatically enrolled or re-enrolled at the cyclical automatic re-enrolment date, ceases active membership and then opts in, the commencement of contributions date should be overwritten with effect from the enrolment date (or start of the next pay reference period (for a minimum contribution pension scheme where the definition of a pay reference period (contribution entitlement) is not the 12 month period aligned to the employer s staging date). Where the automatic enrolment date and enrolment date for a worker fall in the same pay reference period, and the scheme is not a minimum requirement pension scheme with a definition of a pay reference period (contribution entitlement) aligned to tax weeks or months or the period by reference to which the worker is paid their regular wage or salary, the contributions date is the earliest of these dates. continued... A detailed guide to Automatic enrolment for software developers 216

217 Data source: System-derived Description of data Where the automatic enrolment date and re-enrolment date fall in the same pay reference period (and Reenrolment_status_at_cARE_date = N for a worker (see C30A)), and the scheme is not a minimum requirement pension scheme with a definition of a pay reference period (contribution entitlement) aligned to tax weeks or months or the period by reference to which the worker is paid their regular wage or salary, the contributions date is the automatic enrolment date. If re-enrolment_status_ at_care_date = Y, the automatic enrolment date and re-enrolment date cannot fall in the same pay reference period for a worker. Where the automatic re-enrolment date and enrolment date fall in the same pay reference period, (and Reenrolment_status_at_cARE_date = Y for a worker (see C30A)), and the scheme is not a minimum requirement pension scheme with a definition of a pay reference period (contribution entitlement) aligned to tax weeks or months or the period by reference to which the worker is paid their regular wage or salary, the contributions date is the earliest of these dates. If re-enrolment_status_at_ care_date = N for the worker, the contributions date is the enrolment date. continued... A detailed guide to Automatic enrolment for software developers 217

218 Data source: System-derived Description of data NB1: With immediate effect from the contributions date, the payroll system should calculate and deduct the correct pensions contributions, according to the rules set up for the employer s chosen pension scheme. If the payroll system is calculating the employer s contributions as well we would expect that worker and employer contributions are shown in the system separately. If the payroll system is to assess eligibility and deduct contributions on time intrinsically without user intervention, the employer must have informed the payroll systems of the contributions rules to be applied to each worker in advance (see B15). Where the contributions date happens to fall after the date on which earnings are paid in a pay reference period, then by law, the employer may only deduct contributions from subsequent pay reference periods. The deductions that should be made in following pay reference periods must nevertheless reflect the contributions required from the contributions date in the current pay reference period. In order to ensure a legal deduction can be made in the current pay reference period under all circumstances, the employer can use a postponement period to ensure that the contributions date coincides with the start of the pay reference period and thereby never falls after the payment date. NB2: It is possible that a worker s automatic enrolment date, and their contributions date, do not coincide with the start of a pay reference period. If this occurs, unless the rules of the pension scheme in use state otherwise, then the pensions contributions deducted should not be based on earnings over the whole of the pay reference period but should be calculated on a pro-rata basis with effect from the contributions date. The need to calculate pro-rata contributions can be wholly avoided if the employer uses the worker or eligible jobholder postponement period (see B4-B7) to ensure automatic enrolment only takes place with effect from the start of a period. continued... A detailed guide to Automatic enrolment for software developers 218

219 Data source: System-derived Description of data If the contributions date falls after the start of a pay reference period, the earnings and the pensions contributions must be calculated on a pro-rata basis and should be determined as follows: Pro-rata pensionable earnings = [Total pensionable earnings (as defined by pension scheme rules) for the period] [Number of calendar days (including working days, non-working days and bank holidays) from [latest of PRP_start OR Employment_start] to [earlier of Employment_end OR PRP_end] inclusive] x [Number of calendar days from Cont_date to [earlier of Employment_ end OR PRP_end] inclusive]. The results should be rounded to the nearest penny with exactly half a penny rounded up. Boundary examples of the calculation of pro-rata pensionable earnings now follow: Example 1 Long-term worker paid 12,000 per annum in 12 equal monthly amounts of 1,000 (all of which is pensionable under the rules of the employer s chosen qualifying pension scheme). Worker reaches 22nd birthday on 24 January. The definition of a pay reference period is aligned to the period by reference to which the worker is paid their regular wage or salary and the pay reference period is 1-31 January. Automatic enrolment date and contributions date is 24 January. Pro-rata pensionable earnings = [ 1, x 8] = continued... A detailed guide to Automatic enrolment for software developers 219

220 Data source: System-derived Description of data Example 2 Long-term worker paid 12,000 per annum in 12 equal monthly amounts of 1,000. January s overtime of 322 is paid with February s basic pay (all pay is pensionable under the rules of the employer s chosen qualifying pension scheme) Worker reaches 22nd birthday on 24 February The definition of a pay reference period is aligned to tax weeks or months and the pay reference period is 6 February to 5 March Contributions date is 24 February Pro-rata pensionable earnings = [ 1, x 10] = Example 3 Long-term worker paid 500 per week on Wednesdays for the previous Sunday to following Saturday (all of which is pensionable under the rules of the employer s chosen qualifying pension scheme) Worker reaches 22nd birthday on 24 February The definition of a pay reference period is aligned to the period by reference to which the worker is paid their regular wage or salary and the pay reference period is February Contributions date is 24 February Pro-rata pensionable earnings = [ x 3] = Example 4 Long-term worker paid 500 per week fully in arrears on Fridays for the 7 days ending on the previous Saturday. Some overtime was worked making the total pay accrued in week ending 19 February but payable in week ending 26 February (all of which are pensionable under the rules of the employer s chosen qualifying pension scheme) Worker reaches 22nd birthday on 24 February The definition of a pay reference period is aligned to tax weeks or months and the pay reference period is February Contributions date is 24 February Pro-rata pensionable earnings = [ x 5] = A detailed guide to Automatic enrolment for software developers 220

221 Data source: System-derived Description of data C17 Opt-out refund due If a jobholder opts out of a qualifying pension scheme during the opt-out period following automatic enrolment, automatic re-enrolment or opt in, the employer must refund to the jobholder any contributions paid to the scheme by the jobholder except where any of these refunds are required to be paid as tax by a specified date. The date depends on the date a valid opt-out notice is given to the employer (see B10). If the opt-out notice is given to the employer before their payroll arrangements have closed, then the refund must be completed within one calendar month of OptOut_date. If the optout notice is given to the employer after their payroll arrangements have closed, then the refund must be completed by the end of the second following pay reference period. The due date for the opt-out refund is determined in two ways: 1. OptOut_ref_due = OptOut_date + one month IF OptOut_date < next payroll close 2. OptOut_ref_due = [the second future instance of PRP_end] after OptOut_date IF OptOut_date next payroll close NB1: As is already the case today, pension scheme rules will determine whether a refund is due if active membership terminated after the end of the optout period. In such cases, existing arrangements for achieving this through payroll would still apply. Abbreviation used OptOut_ref_due Recommended field size Date continued... A detailed guide to Automatic enrolment for software developers 221

222 Data source: System-derived Description of data NB2: Where automatic enrolment took place close to the end of a tax year, the opt-out period will extend into the following tax year. This could result in the need to make a refund in respect of deductions from the previous tax year. The need to process refunds relating to the previous tax year can be wholly avoided if the employer uses the postponement period (see B4-B7) to ensure automatic enrolment does not take place within, at most, six weeks plus six weeks from the end of the tax year. C18- C29 C30 Intentionally blank EJ status as at the deferral date This data item is designed to capture the worker s status as at the latest deferral date ([Wor_postpone_end + one day] or [EJ_postpone_end + one day]) that falls within the current PRP. If the worker has an eligible jobholder status on the deferral date the employer will not able to use a further eligible jobholder postponement period. If the worker is not an eligible jobholder on this date, the employer will be able to recognise that an eligible jobholder postponement period can be used from the next date in which the worker triggers an eligible jobholder status. EJ_deferral_date_status = Y IF [AGE ON Latest of [Wor_postpone_end + one day] OR [EJ_postpone_end + one day] IF PRP_start AND earliest of [PRP_end OR Employment_end OR 75_date]] 22 AND < SPA AND AE_PRP > 0 Abbreviation used EJ_deferral_date_status Recommended field size Y/N continued... A detailed guide to Automatic enrolment for software developers 222

223 Data source: System-derived Description of data This data item should be date stamped on expiry of each postponement period (on the deferral date) to provide an accurate snap shot of the workers status at a point in time. NB1: It is possible for both Wor_postpone_end + one day or EJ_postpone_end + one day to both appear in the same pay reference period. In this instance, the employer will need to know whether the worker was an eligible jobholder at both. C30 A Re-enrolment status as at the automatic re-enrolment date This data item is designed to capture the worker s status as at the cyclical automatic re-enrolment date that falls within the current pay reference period. Any workers must be automatically re-enrolled with effect from the cyclical automatic re-enrolment date if they are eligible jobholders on that date and: a. have had an automatic enrolment date with that employer, and b. are not active members of a qualifying pension scheme with that employer, and c. who opted out or ceased membership of a qualifying pension scheme with that employer more than 12 months before the automatic re-enrolment date, and d. who are not subject to the transitional period for schemes with defined benefits. Postponement cannot be used at automatic re-enrolment. Abbreviation used Re-enrol_cARE_date_status Recommended field size Y/N continued... A detailed guide to Automatic enrolment for software developers 223

224 Data source: System-derived Description of data Re-enrol_cARE_date_status = Y IF [AGE ON care_date IF PRP_start AND earliest of [PRP_end OR Employment_end OR 75_date]] 22 AND < SPA AND AE_PRP > 0 AND AE_date is present AND DB Flag = N AND Memb_QPS = N AND [care_date is > the latest of [optout_date + 12months] and [End_pension_date + 12 months]] This data item may be overwritten at subsequent cyclical automatic re-enrolment dates. C31 Worker status as at the date pension notice was received In order to determine what route should be taken once notice to join a pension scheme, whether an opt-in notice or a joining notice, is received by the employer, the system should record the workers status on the date the pension notice was received. Abbreviation used Pension_notice_status Recommended field size JH/EW continued... A detailed guide to Automatic enrolment for software developers 224

225 Data source: System-derived Description of data Pension_notice_status is JH (eligible jobholder or noneligible jobholder) IF Pension_notice_date PRP_start AND earliest of [PRP_ end OR Employment_end OR 75_date] AND AGE ON Pension_notice_date 16 AND < 75 AND QE_PRP > 0 OR Pension_notice_status is EW IF Pension_notice_date PRP_start AND earliest of [PRP_ end OR Employment_end OR 75_date] AND AGE ON Pension_notice_date 16 AND < 75 AND QE_PRP 0 NB1: The system will only know whether the pension notice date at B17 falls within the period PRP start (for the pay reference period in which the assessment is running) to the date the assessment is being made. If a pension notice is received after the date the assessment is run but prior to the end of the pay reference period, user intervention will be required to record the status of the worker on the date the pension notice was received and thus determine what action the employer must take. A detailed guide to Automatic enrolment for software developers 225

226 Data source: System-derived Description of data C32 Date in which an opt-in enrolment date can first apply The pre-cursor to C15. The identification of the opt-in enrolment date starts on the first day of the pay reference period after the pension notice was received if it was received before payroll arrangements had closed for the next pay reference period. Or it starts on the first day of the second pay reference period after the pension notice had been received if payroll arrangements had closed for the next pay reference period on the date the notice was received. The identification of the enrolment date is run in C15. The JH_OE_date signifies the first available date where the system must start that assessment. [JH_OE_date = [PRP_end + one day] IF Pension_notice_date PRP_start AND earliest of [PRP_ end OR Employment_end OR 75_date] AND Pension_notice_date PAYROLL CLOSE AND Pension_notice_status is JH AND Memb_QPS_flag = N OR [JH_OE_date = second future instance of PRP_start IF Pension_notice_date PRP_start AND earliest of [PRP_ end OR Employment_end OR 75_date] AND Pension_notice_date > PAYROLL CLOSE Abbreviation used JH_OE_date Recommended field size Date continued... A detailed guide to Automatic enrolment for software developers 226

227 Data source: System-derived Description of data AND Pension_notice_status is JH AND Memb_QPS_flag = N NB1: Where the system does not hold future PRPs within a table, the second future instance of PRP_start can be calculated by: [PRP_end + one day + PRP + one day] Example 1 Where the PRP is calendar monthly (1-31 May) and pension notice is received on 15 May: first instance of PRP_start: 1 June; second instance of PRP_start: 1 July (PRP_end + one day + Calendar Monthly + one day) Example 2 Where the PRP is fortnightly (6-19 May) and Pension notice is received on 15 May: first instance of PRP_start: 20 May; second instance: 3 June (PRP_end + one day + Fortnight (or 14 days) + one day) A detailed guide to Automatic enrolment for software developers 227

228 2.7 Report capabilities Employers may require their payroll system to produce reports listing certain categories of workers. These output/reports from the payroll system will be needed as inputs/prompts for the employer to take further action in order to comply with remaining aspects of the duties (eg around the administration of automatic enrolment, re-enrolment, opt out, opt in and the provision of information). 1 All workers who become eligible jobholders for the first time in the current PRP and who fall to be automatically enrolled 2 All workers who achieve a non-eligible jobholder status for the first time in the current PRP Report listing workers with Specify employee information; name, employee number, AE_date IF AE_date PRP_start AND PRP_end Specify employee information; name, employee number, IF JH_date PRP_start AND PRP_end AND Memb_QPS=N For these workers the employer must Complete automatic enrolment (including providing the jobholder with automaticenrolment information and providing the qualifying pension scheme with specified jobholder information) unless the eligible jobholder was already an active member of a qualifying scheme on the AE date Provide the jobholder with the information specified about the right to opt in to a qualifying pension scheme if they have not previously received the information for example via a postponement notice continued... A detailed guide to Automatic enrolment for software developers 228

229 3 All workers who achieve an entitled worker status for the first time in the current PRP 4 All workers who have an eligible or non-eligible jobholder status as at Pension_notice_date 5 All workers who were entitled workers as at the Pension_notice_date Report listing workers with Specify employee information; name, employee number, IF Wor_date PRP_start AND PRP_end AND Memb_QPS=N Specify employee information; name, employee number, pension notice date IF Pension_notice_status = JH AND Pension_notice_date PRP_ start AND PRP_end AND Memb_QPS=N Specify employee information; name, employee number, pension notice date IF Pension_notice_status = EW AND Pension_notice_date PRP_ start AND PRP_end AND Memb_QPS=N For these workers the employer must Provide the entitled worker with the information specified about the right to join a pension scheme if they have not previously received the information for example via a postponement notice Identify that the worker is a jobholder and so the opt in process must be followed and start process of identifying the enrolment date Identify that the worker is an entitled worker and so the joining process must be followed and complete joining process continued... A detailed guide to Automatic enrolment for software developers 229

230 6 All workers with an enrolment date in the PRP 7 All workers who become jobholders and are active members of a qualifying scheme with the employer 8 All workers who are eligible jobholders on the cyclical automatic reenrolment date and who fall to be automatically re-enrolled Report listing workers with Specify employee information; name, employee number, enrolment date IF OE_date PRP_start AND PRP_end Specify employee information; name, employee number, IF AE_date PRP_start AND PRP_end OR JH_date PRP_start AND PRP_end AND Memb_QPS=Y Specify employee information; name, employee number, IF care_date is PRP_Start AND PRP_End AND Re-enrol_cARE_date_status = Y For these workers the employer must Complete opt in enrolment (including providing the jobholder with automaticenrolment information and providing the qualifying pension scheme with specified jobholder information) Provide the jobholder with the information specified for existing members of qualifying schemes Complete automatic reenrolment (including providing the jobholder with automaticenrolment information and providing the qualifying pension scheme with specified jobholder information) A detailed guide to Automatic enrolment for software developers 230

231 Declaration of compliance (registration) information Shortly after they become subject to the duties for the first time, the employer is obliged to submit information to the regulator giving details of how they have discharged their duties. This is called declaration of compliance The deadline for declaration is five months from the employer s staging date or where the staging period has ended, from the day that PAYE income first becomes payable in respect of any worker The data generated by the system in the core functionality may be used to support an employer in complying with the declaration requirements. Alternatively an employer may require their wider business software system using the calculations in this section, to support their declaration requirements Where the employer has chosen not to use a postponement period, the employer has a period of six weeks from the duty start date, in which to complete automatic enrolment. Where the employer has chosen to use a worker postponement period (or multiple postponement periods) for a period of up to 3 months, the employer has a period of six weeks from the deferral date in which to complete automatic enrolment. It is therefore possible for the employer to run this report at any point from the duty start date and within the five month declaration window. Automatic enrolment will have to have been completed in order to provide the information required at declaration of compliance. The table on the following page includes the following information that is required at the point of declaration: The use of binary flags suggests one way of achieving the necessary function within the system. However, there may be other ways to achieve the same function. It is for developers to decide what is appropriate within their system(s). Note 1: All data will be required to be collated where the employer is running multiple payrolls and/or where there are workers who are not included on the payroll. Note 2: This table only covers those declaration data requirements that can be supported by payroll systems. It is not an exhaustive list of all the declaration data requirements. A detailed guide to Automatic enrolment for software developers 231

232 Declaration question The total number of workers employed on the employer s staging date. The number of eligible jobholders automatically enrolled into each scheme. Further guidance This is the number of workers in employment on the employer s staging date. This report will generate the number of workers on each payroll. The employer when declaring will have to add in any other workers who are not included on payroll. Declaration is a snapshot of what the employer has done with the workers that were in employment at their staging date. The employer must provide the number of these workers who they have automatically enrolled. They will either have automatically enrolled these eligible jobholders with effect from their staging date (where the employer did not use postponement) or with effect from the deferral date(s) (where the employer did use postponement for all their workers at staging) or with effect from the staging date for some and the deferral date(s) for some (where the employer uses postponement for some of their workers at staging). So where an employer: a. did not use postponement at staging date: the employer must provide the number of eligible jobholders in employment at their staging date who they automatically enrolled with effect from the staging date. This will include anyone who subsequently opted out or left employment. Exclude any eligible jobholders with an automatic enrolment date after the staging date. Exclude anyone who opted in or asked to join the scheme. The information is to be provided per pension scheme that was used for the automatic enrolment. Reports listing workers with For the complete workforce, the number of workers that meet the following conditions: Employment_start Duty_start AND Employment_end Duty_start For each pension scheme that was used to automatically enrol these eligible jobholders, the number of eligible jobholders that meet the following conditions: Employment_start Duty_start AND Employment_end Duty_start AND Memb_QPS_date Duty_start AND AE_date is Duty_start OR AE_date is [Wor_postpone_end + one day] continued... A detailed guide to Automatic enrolment for software developers 232

233 Declaration question Further guidance b. used postponement for some of their workers at their staging date, and the workers postponed all have the same deferral date; the employer must provide the number of eligible jobholders in employment at their staging date who a) they automatically enrolled with effect from the staging date and b) who were eligible jobholders on the deferral date for the postponement used at staging. This will include anyone who subsequently opted out or left employment. Exclude any eligible jobholders with an automatic enrolment date after the staging date. Exclude any eligible jobholders as at any other deferral date (ie for whom postponement was used after staging). Exclude any eligible jobholders on the deferral date who were not in employment on the staging date. Exclude anyone who opted in or asked to join the scheme The information is to be provided per pension scheme that was used for the automatic enrolment. c. used postponement for some of their workers at their staging date, and the workers postponed have different deferral dates; the employer must provide the number of eligible jobholders in employment at their staging date who a) they automatically enrolled with effect from the staging date and b) who were eligible jobholders on each of the deferral dates for the postponement used at staging. This will include anyone who subsequently opted out or left employment. Exclude any eligible jobholders with an automatic enrolment date after the staging date. Exclude any eligible jobholders as at any other deferral date (ie for whom postponement was used after staging). Reports listing workers with continued... A detailed guide to Automatic enrolment for software developers 233

234 Declaration question The total number of workers who were existing active members of a qualifying pension scheme on and before the staging date The number of eligible jobholders subject to the transitional period Further guidance Exclude any eligible jobholders on the deferral dates that were not in employment on the staging date. Exclude anyone who opted in or asked to join the scheme. The information is to be provided per pension scheme that was used for the automatic enrolment. This is the total number of workers who were already an existing member of a qualifying scheme on the employer s staging date. This will include any worker contractually enrolled into a qualifying pension scheme on or before the staging date. Exclude any worker who has been automatically enrolled, opted in to or joined the pension scheme on or after the staging date. This will not apply for the majority of employers. This only applies where the employer has a pension scheme with defined benefits (see Detailed guidance no. 3b Transitional period for schemes with defined benefits). When they first become subject to the duties, an employer with a qualifying pension scheme with defined benefits may defer automatic enrolment for workers that meet specified conditions for an initial transitional period. It does not delay automatic enrolment for all workers as it can only be applied to the workers that meet the conditions. Reports listing workers with The employer is required to report on all workers that meet the following conditions: Employment_start Duty_start AND Employment_end Duty_start AND Memb_QPS_flag = Y AND Memb_QPS_date < Duty_start The employer is required to report the total number of workers that meet the following conditions: Employment_start Duty_start AND Employment_end Duty_start AND DB_flag = Y continued... A detailed guide to Automatic enrolment for software developers 234

235 Declaration question The total number or workers who were in employment as at the duty start date and who are not listed in the above three categories Further guidance This will be everybody else in employment on the staging date. For example, this will include any worker who is under 22 and above state pension age or who is earning less than the earnings trigger for automatic enrolment and is not already in a qualifying pension scheme. Reports listing workers with This can be calculated using a SUM of all workers who meet the conditions: Employment_start Duty_start AND Employment_end Duty_start AND Memb_QPS=N AND AE_date is not present AND DB_flag = N A detailed guide to Automatic enrolment for software developers 235

236 Re-declaration information Broadly every three years after the duties start to apply the employer is obliged to submit information to the regulator giving details of how they have discharged their cyclical automatic re-enrolment duties. This is called re-declaration of compliance. The deadline for re-declaration is either: two months from the cyclical automatic re-enrolment date, if the employer has eligible jobholders that they must automatically reenrol, or at the end of the 3 year period following the last submission of declaration or re-declaration information to the regulator if the employer has no eligible jobholders to automatically re-enrol. The date the declaration (or re-declaration) information was provided to the regulator is the date of the last provision of information before the declaration (or re-declaration) deadline. For example, employer A has a staging date of 1 July. The deadline for declaration is 31 October. Employer A completed their submission of information through the online facility on 2 October. They updated the information on 28 October. On 3 November they realise an error occurred and updated the information again. The date the declaration information was provided is 28 October. As with declaration, the data generated by the system in the core functionality may be used to support an employer in complying with the re-declaration requirements. Alternatively an employer may require their wider business software system using the calculations in this section, to support their re-declaration requirements. The table on the following page includes the following information that is required at the point of re-declaration: The use of binary flags suggests one way of achieving the necessary function within the system. However, there may be other ways to achieve the same function. It is for developers to decide what is appropriate within their system(s). Note 1: All data will be required to be collated where the employer is running multiple payrolls and/or where there are workers who are not included on the payroll. Note 2: This table only covers those declaration data requirements that can be supported by payroll systems. It is not an exhaustive list of all the declaration data requirements. A detailed guide to Automatic enrolment for software developers 236

237 Re-declaration question The total number of workers employed on the employer s cyclical automatic re-enrolment date (for an employer with eligible jobholders to automatically reenrol) or at the point of re-declaration (for an employer with zero eligible jobholders to automatically re-enrol The number of eligible jobholders automatically reenrolled into each scheme (only applicable where an employer has eligible jobholders that they must automatically re-enrol) Further guidance This is the number of workers in employment on the employer s automatic re-enrolment date (where the employer has eligible jobholders to automatically re-enrol) or at the point of re-declaration (where the employer does not have any eligible jobholders to automatically re-enrol). This report will generate the number of workers on each payroll. The employer when redeclaring will have to add in any other workers who are not included on payroll. Re-declaration is a snapshot of what the employer has done with the workers that were in employment at the cyclical reenrolment date (for an employer with eligible jobholders to automatically reenrol). An employer with eligible jobholders to automatically re-enrol on the cyclical automatic re-enrolment date must provide the number of eligible jobholders in employment at the cyclical automatic reenrolment date who they have automatically re-enrolled. This will include anyone who subsequently opted out or left employment Exclude any eligible jobholders with an automatic enrolment date on the cyclical automatic re-enrolment date and who are being automatically enrolled for the first time with effect from the same date. Exclude anyone who opted in or asked to join the scheme. The information is to be provided per pension scheme that was used for the automatic re-enrolment. Reports listing workers with For the complete workforce, the number of workers that meet the following conditions: Employment_start care_date AND Employment_end care_date OR Employment_start date of re-registration AND Employment_end date of re-registration For each pension scheme that was used to automatically reenrol these eligible jobholders, the number of eligible jobholders that meet the following conditions: Employment_start care_date AND Employment_end care_date AND Re-enrol_cARE_date_ status = Y A detailed guide to Automatic enrolment for software developers 237

238 Re-declaration question The total number of workers who were existing active members of a qualifying pension scheme on and before the employer s cyclical automatic re-enrolment date (for an employer with eligible jobholders to automatically reenrol) or at the point of re-declaration (for an employer with zero eligible jobholders to automatically re-enrol) Further guidance This is the total number of workers who were already an existing member of a qualifying scheme on either the employer s cyclical automatic re-enrolment date (for an employer with eligible jobholders to automatically re-enrol) or at the point of re-declaration (for an employer with zero eligible jobholders to automatically reenrol). Exclude any worker who has been automatically enrolled, re-enrolled opted in to or joined the pension scheme on or after the cyclical automatic re-enrolment date or the point of re-declaration. Reports listing workers with The employer is required to report on all workers that meet the following conditions: [Employment_start care_date AND Employment_end care_date AND Memb_QPS_flag = Y AND Memb_QPS_date < care_date] OR [Employment_start date_of_re-registration AND Employment_end date_of_re-registration AND Memb_QPS_flag = Y AND Memb_QPS_date < date_of_reregistration] A detailed guide to Automatic enrolment for software developers 238

239 Re-declaration question The number of eligible jobholders subject to the transitional period The total number or workers who were in employment as at the duty start date and who are not listed in the above three categories Further guidance This will not apply for the majority of employers. This only applies where the employer has a pension scheme with defined benefits (see Detailed guidance no. 3b Transitional period for schemes with defined benefits). When they first become subject to the duties, an employer with a qualifying pension scheme with defined benefits may defer automatic enrolment for workers that meet specified conditions for an initial transitional period. It does not delay automatic enrolment for all workers as it can only be applied to the workers that meet the conditions. This will be everybody else in employment on either the employer s cyclical automatic re-enrolment date (for an employer with eligible jobholders to automatically reenrol) or at the point of re-declaration (for an employer with zero eligible jobholders to automatically re-enrol). Reports listing workers with The employer is required to report the total number of workers that meet the following conditions: Employment_start Duty_start AND Employment_end Duty_start AND DB_flag = Y This can be calculated using a SUM of all workers who meet the conditions: [Employment_start care_date AND Employment_end care_date AND Re-enrol_cARE_date_ status = N AND Memb_QPS = N AND DB_flag = N] continued... A detailed guide to Automatic enrolment for software developers 239

240 Re-declaration question Further guidance Reports listing workers with OR [Employment_start date_of_re-registration AND Employment_end date_of_re-registration AND Memb_QPS = N AND DB_flag = N] A detailed guide to Automatic enrolment for software developers 240

241 2.8 Record-keeping requirements The employer is obliged to keep a number of records in relation to their compliance for six years and may authorise a third party to keep, preserve or provide the records on their behalf. Data generated by payroll systems using the calculations in this section that will support the employer in meeting the record-keeping requirements are the following: Name of every worker with a Cont_date NI number (where in existence) of every worker with a Cont_date DoB for every worker with a Cont_date AE_date for every worker who has one Worker_join_date for every worker who has one. Following each instance of Cont_date: SUM_PRP in each pay reference period Evidence of the rule/formula used to calculate contributions required by the pension scheme for each jobholder The amount of contributions (both employer and member) payable in respect of each member in each pay reference period The amount of contributions (both employer and member) actually made/deducted in respect of each jobholder/member in each pay reference period. It is worth noting that the employer is also obliged to keep records relating to their use of the postponement period. However these records relate specifically to the date on which the postponement period notice was provided. This is covered in the record-keeping requirements in section 3 of this guide. The employer s chosen pension scheme is also obliged to keep a number of records in relation to members. Data generated by the payroll system using the calculations in this section that will support the employer in providing accurate records to the pension scheme are the following: Cont_date Where Memb_QPS = Y, Name NI number (where in existence) DoB. A detailed guide to Automatic enrolment for software developers 241

242 3.0 Specification of data/ routines for wider business support software In this section we cover the data sources and calculation routines for the wider functionality that may support an employer in the end-to-end duties. Primarily this section covers the requirement to provide specified information to the worker on different occasions Section 3 is divided into five parts: 3.1 Overview 3.2 Table of data sources 3.3 Specification of calculation routines 3.4 Reports capability 3.5 Record-keeping 3.1 Overview Using the data, the system will be able to calculate: deadlines for the legally prescribed automatic enrolment, re-enrolment, opt out and refund processes the provision of information to a number of categories of workers the deadline for the employer to complete a declaration of compliance with the regulator wider record-keeping requirements. The calculation routines described in this section make use of: automatic enrolment data as in section 2 worker data as in section 2 additional worker data data derived by the payroll (or other) system. A detailed guide to Automatic enrolment for software developers 242

243 3.0 Specification of data/routines for wider business support software In this section we assume that a number of necessary conditions for compliance, which are not supported by software are continuously met under the duties. These assumptions are that: prior to becoming subject to the duties, employers have in place a pension scheme/pension schemes that meet the relevant qualifying scheme criteria or automatic enrolment scheme criteria in order to be used under the duties the employer is satisfied that its chosen scheme(s) continues to meet the relevant criteria on an ongoing basis. If this is not the case then the employer will have to automatically re-enrol affected members within specified time frames the employer has identified those on the system who are workers the employer has identified the workers that meet the definition of working or ordinarily working in the UK under the worker s contract and it is these workers that will undergo the assessment of age and earnings in the software system. Anyone employing a worker who works, or ordinarily works, in the UK under a worker s contract will have duties under the Pensions Act 2008 the worker remains an active member of the pension scheme unless an act on the worker s part causes them to cease active membership (ie they decide to terminate membership, leave work or retire). If anything is done by the employer, pension scheme or any other third party to interrupt active membership then the employer will be obliged to automatically re-enrol the affected jobholder within specified time frames. The approach in this section is one way of achieving the necessary function within the system. However, there may be other ways to achieve the same function. It is for developers to decide what is appropriate within their system(s). A detailed guide to Automatic enrolment for software developers 243

244 3.0 Specification of data/routines for wider business support software 3.2 Data sources Note 1: Where an employer has multiple contracts of employment with an individual worker, the employer must consider and, where appropriate, seek advice on whether the employment relationship is of a single employment with services being performed across each of the contracts. See Detailed guidance no. 3 Assessing the workforce for more information. In such circumstances, the employer should aggregate the qualifying earnings for the totality of those employment contracts and all the duties apply only once to the worker (eg automatic enrolment, opt out etc). If an employer is of the view that each of the employment contracts with an individual is wholly separate, they must apply the duties separately in relation to each contract. Note 2: Throughout these data items the deferral date (the end of the postponement period) corresponds to worker postponement + one day or Eligible jobholder postponement + one day Note 3: In this section for any references to an employer, provider or jobholder giving information required under the legislation give has the meaning in the Interpretation Act For more information see the Information to workers resource in the resources section of the detailed guidance on automatic enrolment. Data source: Additional worker data Description of data D1 D2 Destined automatic enrolment scheme is a contractbased pension flag Where the employer is using a contract-based workplace pension scheme (also known as a personal pension scheme ) for automatic enrolment or re-enrolment, there are modified requirements in respect of information and the automatic enrolment process. Invalid opt-out notice given to employer There are a number of requirements for opt-out notices to be valid. If the jobholder gives an invalid opt-out notice, the employer must inform the jobholder of the reasons why it is invalid and the opt-out period is extended. The system could prompt the employer to consider whether an opt-out is valid to enable the employer to record their action and inform a jobholder about an invalid opt-out notice. Abbreviation used WPP_flag Recommended field size Y/N Abbreviation used Invalid_optout_rec Recommended field size Y/N A detailed guide to Automatic enrolment for software developers 244

245 3.0 Specification of data/routines for wider business support software Data source: Additional worker data Description of data D3 D3A D4 Automatic enrolment information given As part of automatic enrolment, re-enrolment and opt in, the employer must give the jobholder specified information called enrolment information. This is the date the enrolment information is given to the jobholder. It is important for the system to record this date as it may be used to define the start of the opt-out period in some cases (see E3). The calculation for determining the deadline (AE_due) by when the enrolment information must be given is at E1. AE_info_giv must be AE_due A template of this notice is available on our website at: Jobholder information to pension scheme given As part of automatic enrolment, re-enrolment and opt in, the employer must give the pension scheme specified information about the jobholder. The calculation for determining the deadline (AE_due) by when the enrolment information must be given is at E1. JobH_info_giv must be AE_due Date contract-based pensions terms and conditions given to jobholder Where an employer is using a contract-based pensions scheme for automatic enrolment, re-enrolment or opt in, the employer must ensure the jobholder is given specified information known as Terms and Conditions. It is important for the system to record this date as it may be used to define the start of the opt-out period in some cases (see E3). Abbreviation used AE_info_giv Recommended field size Date Abbreviation used JobH_info_giv Recommended field size Date Abbreviation used WPP_info_date Recommended field size Date continued... A detailed guide to Automatic enrolment for software developers 245

246 3.0 Specification of data/routines for wider business support software Data source: Additional worker data Description of data The calculation for determining the deadline (AE_due) by when the enrolment information must be given is at E1. WPP_info_date must be AE_due NB1: At automatic re-enrolment and enrolment (opt in) this process may be modified at the discretion of the employer if the worker is already a member of a contract based pension scheme and the employer wants to use that scheme to fulfil their re-enrolment or enrolment (opt in) duties. In these circumstances the employer may choose to use a modified automatic enrolment process. Under the modified process, before the end of what is known as the joining window (the six week period from the automatic re-enrolment date or enrolment date) the employer must make arrangements to achieve active membership for the eligible jobholder, effective from their automatic re-enrolment date by making arrangements with the provider of a personal pension scheme, so that: the scheme is an automatic enrolment scheme, and the eligible jobholder is an active member of that scheme. D5 Date active membership of an automatic enrolment scheme achieved This is the date on which the administrative steps for creating active membership have been achieved following automatic enrolment, re-enrolment and opt in into a pension scheme other than a contract-based pension scheme. Abbreviation used Active_memb_complete Recommended field size Date continued... A detailed guide to Automatic enrolment for software developers 246

247 3.0 Specification of data/routines for wider business support software Data source: Additional worker data Description of data The employer will rely on their chosen pension scheme to inform them of this date. Memb_QPS_flag (see B3) should move from N to Y with effect from this date, if it has not already been moved following the deduction of contributions. Whatever date these administrative steps are completed on the start date of active membership must be backdated to the automatic enrolment date or enrolment date for opt in. It is important for the system to record this date as it may be used to define the start of the opt-out period in some cases (see E3). The calculation for determining the deadline (AE_due) by when the active membership of a qualifying pension scheme must be achieved is at E1. Active_memb_complete must be AE_due D6 Type of Postponement Period Notice to be given In order to use the worker or eligible jobholder postponement period, the employer must give a notice, containing specified information to the affected worker(s). There are up to four different options for the postponement notice which vary in the amount of information they must contain these are described below at D7-D10. To varying degrees each of the options contains some of the same information as the separate information requirements for each category of worker (as described in E2, E5 and E6). This means that depending on the employer s chosen option then those separate requirements may no longer apply to that worker. That is why it may be important for a software system supporting the wider end-to-end duties to understand which postponement period notice option the employer has chosen. This will enable the system to correctly identify which additional information provision duties will apply in future for that worker. Abbreviation used Postpone_notice_type Recommended field size Indicator of which of up to four options is given continued... A detailed guide to Automatic enrolment for software developers 247

248 3.0 Specification of data/routines for wider business support software Data source: Additional worker data Description of data It is worth noting that none of the options for the postponement period notice incorporate the information that must be provided as part of automatic enrolment however it is possible for the employer to provide appropriately worded automatic enrolment information at the same time as they provide the postponement period notice, if they wish to do so. It may be that the system should determine the type of postponement period notice to apply by reference to a user-determined rule rather than require user input for each worker record (eg the employer could stipulate that they will always issue a generic notice A for the worker postponement period). D7 Worker Postponement Period General Notice A given The first option for the postponement period notice is General Notice A. This notice may only be given to workers affected by the worker postponement period. It must not be used for the eligible jobholder postponement period. The notice covers all categories of workers and it brings together a number of the separate information requirements for The different categories of workers: The information for jobholders about their right to opt in to an automatic enrolment scheme (described at E5) The information for entitled workers about their right to join a pension scheme (described at E6). The information for jobholders who are already active members of a qualifying scheme (described at E2) As the notice contains the same information as the separate information requirements for each category of worker, if this notice is used then those separate requirements no longer apply to that worker. This means an employer choosing this option does not need to act on expiry of the postponement period or thereafter to provide information as per the requirements at E2, E5 and E6. Abbreviation used Postpone_A_info_giv Recommended field size Date continued... A detailed guide to Automatic enrolment for software developers 248

249 3.0 Specification of data/routines for wider business support software Data source: Additional worker data Description of data This data item is the date the Postponement Period General Notice A is given to the worker. It is important for the system to record this date as it is one of the records that the employer is obliged to keep. The calculation for determining the deadline (Postpone_ info_due) by when a postponement period notice (of any kind) must be given is at E8. Postpone_A_info_giv must be Postpone_info_due The payroll-driven content of the information is found at row 6 at Annex B. A template of general notice A is available on our website at: postponement-all. D8 Worker Postponement Period General Notice B given The second option for the postponement period notice is Postponement Period General Notice B. Like General Notice A, this notice may only be given to workers affected by the worker postponement period and must not be used for the eligible jobholder postponement period. This notice is applicable to all workers excluding any (eligible or non-eligible) jobholders who are active members of a qualifying pension scheme with the employer. It is therefore most useful for employers who do not have a qualifying scheme in place before their staging point. The notice covers the information requirement for the following categories of workers: The information for jobholders about their right to opt in to an automatic enrolment scheme (described at E5) The information for entitled workers about their right to join a pension scheme (described at E6). Abbreviation used Postpone_B_info_giv Recommended field size Date continued... A detailed guide to Automatic enrolment for software developers 249

250 3.0 Specification of data/routines for wider business support software Data source: Additional worker data Description of data As the notice contains the same information as the separate information requirements for two categories of worker, if this notice is used then those separate requirements no longer apply to that worker. This means an employer choosing this option does not need to act on expiry of the postponement period or thereafter to provide information as per the requirements at E5 and E6. This data item is the date the Postponement Period General Notice B is given to the worker. It is important for the system to record this date as it is one of the records that the employer is obliged to keep. The calculation for determining the deadline (Postpone_ info_due) by when a postponement period notice (of any kind) must be given is at E8. Postpone_B_info_giv must be Postpone_info_due The payroll-driven content of the information is found at row 7 at Annex B. A template of general notice B is available on our website at: postponement-all-except. D9 Postponement Period Tailored Notice given The third and fourth options (see D10) for the postponement period are what are known as tailored postponement period notices. Tailored notices may be given to workers affected by the worker postponement period if the employer wishes to provide their workers only with the information that is relevant to the category they would fall into were they not subject to the worker postponement period. The tailored nature of the notice means that the employer must have made an assessment of which category the worker would fall into before issuing the notice. The content of the notice is then determined by that category, there are separate mandatory information requirements depending on whether the worker would be a jobholder or entitled worker. Abbreviation used Postpone_tailor_JH_info_giv Recommended field size Date continued... A detailed guide to Automatic enrolment for software developers 250

251 3.0 Specification of data/routines for wider business support software Data source: Additional worker data Description of data As the tailored information is only relevant to the category of worker the worker falls into at the start of the postponement period, on expiry of the period the employer need not issue further information if the worker s category has not changed but will need to continue to monitor age and earnings to identify the first time a change in category triggers any other information requirements. The third postponement period notice option is the tailored notice for jobholders (includes eligible and non-eligible jobholders). It is optional at worker postponement but because the eligible jobholder postponement period can only be triggered when a worker attains or regains eligible jobholder status, the employer must always use this type of postponement period notice whenever they apply the eligible jobholder postponement period. This data item is the date the postponement period tailored notice for jobholders is given to the worker. It is important for the system to record this date as it is one of the records that the employer is obliged to keep. The calculation for determining the deadline (Postpone_ info_due) by when a postponement period notice (of any kind) must be given is at E8. Postpone_tailor_ JH_info_giv must be Postpone_info_ due The payroll-driven content of the information is found at row 8 at Annex B. A template of the tailored notice for jobholders is available on our website at: uk/non-eligible-postponement. Software developers should note that this template uses the term non-eligible jobholder and so if it is intended to use for jobholders (both eligible and non-eligible) this will need to be amended on the system version. Alternatively, there is another template version of this notice which is aimed at eligible jobholders as it also contains the enrolment information. This template is available at: uk/eligible-postponement. continued... A detailed guide to Automatic enrolment for software developers 251

252 3.0 Specification of data/routines for wider business support software Data source: Additional worker data Description of data NB1: If the employer chooses to use this option for worker postponement, then they will still have a requirement to give entitled worker information on the first occasion that the worker meets that criteria. In practice this may mean that they will still need to assess the worker each pay reference period during the postponement period. D10 Postponement Period Tailored Notice for Entitled Workers given The fourth option for the postponement period notice is tailored for an entitled worker. If they use this type of postponement period notice, then the separate requirements to provide information about the right to join a (non-qualifying) pension scheme when a worker first becomes an entitled worker (as described at E6) will no longer apply to that worker. The calculation for determining the deadline (Postpone_ info_due) by when a postponement period notice (of any kind) must be given is at E8. Postpone_tailor_wor_info_giv must be Postpone_info_ due The payroll-driven content of the information is found at row 9 at Annex B. A template of the tailored notice for entitled workers is available on our website at: gov.uk/entitled-postponement. NB1: If the employer chooses to use this option for worker postponement, then they will still have a requirement to give jobholder information on the first occasion that the worker meets the criteria to be a noneligible jobholder. In practice this may mean that they will still need to assess the worker each pay reference period during the postponement period. A detailed guide to Automatic enrolment for software developers 252

253 3.0 Specification of data/routines for wider business support software Data source: Additional worker data Description of data D11 Right to opt in information to jobholder given The employer is obliged to provide jobholders with information that explains their right to opt in to an automatic enrolment pension scheme. This information must be provided no later than six weeks after the worker becomes a jobholder with a right to opt in for the first time. The employer is only obliged to provide this information once per worker, per employment. This information must be provided to a non-eligible jobholder on the first occasion they become a jobholder unless: they are an active member of a qualifying scheme they have previously been an eligible jobholder who was automatically enrolled and opted out, the employer has previously applied a worker or eligible postponement period and provided the worker with any one of postponement period notices A, B or the notice tailored for jobholders (see D7, D8 and D9) the non-eligible jobholder is subject to the transitional period for schemes with defined benefits (note the transitional period can only be applied to a worker who was an eligible jobholder on the employer s first enrolment date). continued... A detailed guide to Automatic enrolment for software developers 253

254 3.0 Specification of data/routines for wider business support software Data source: Additional worker data Description of data It must also be provided to an eligible jobholder who has ceased active membership of a qualifying scheme, on the first occasion they are an eligible jobholder after membership ceased unless: they were previously a non-eligible jobholder and received the information they have previously been automatically enrolled and opted out the employer has previously applied a worker or eligible postponement period and provided the worker with any one of postponement period notices A, B or the notice tailored for jobholders (see D7, D8 and D9), or the eligible jobholder is subject to the transitional period for schemes with defined benefits (note the transitional period can only be applied to a worker who was an eligible jobholder on the employer s first enrolment date). The calculation for determining the deadline (OptIn_ info_due) by when the information must be given is at E5. Optin_info_giv must be OptIn_info_due The payroll-driven content of the information is found at row 2 at Annex B. A template of this notice is available on our website at: D12 Right to join information to worker given The employer is obliged to give entitled workers, who are not already contributing to a workplace pension scheme, with information that explains their right to join a pension scheme (there is no duty on the employer to provide a qualifying pension scheme with employer contributions for such workers). Abbreviation used Notice_join_info_giv Recommended field size Date continued... A detailed guide to Automatic enrolment for software developers 254

255 3.0 Specification of data/routines for wider business support software Data source: Additional worker data Description of data This information must be provided no later than six weeks after a worker becomes an entitled worker for the first time. The employer is only obliged to provide this information once per worker, per employment. This information must be provided to a worker on the first occasion they become an entitled worker unless: they are an active member of a qualifying scheme the employer has previously applied a worker or eligible postponement period and provided the worker with any one of postponement period notices A, B or the notice tailored for entitled workers (see D7, D8 and D10),or the entitled worker is subject to the transitional period for schemes with defined benefits (note the transitional period can only be applied to a worker who was an eligible jobholder on the employer s first enrolment date). The calculation for determining the deadline (Notice_ join_info_due) by when the information must be given is at E6. Notice_join_info_giv must be Notice_join_info_due The payroll-driven content of the information is found at row 2 at Annex B. A template of this notice is available on our website at: D13 DB phasing information to eligible jobholder given When they first become subject to the duties, an employer with a qualifying DB scheme or qualifying hybrid scheme with defined benefits may delay automatic enrolment for workers that meet specified conditions until the end of a transitional period, even if they would otherwise fall to be automatically enrolled. Abbreviation used DB_phasing_info_giv Recommended field size Date continued... A detailed guide to Automatic enrolment for software developers 255

256 3.0 Specification of data/routines for wider business support software Data source: Additional worker data Description of data The conditions that the worker must meet are that: a. They are an eligible jobholder on the employer s first enrolment date b. That they have been employed by the employer for a continuous period before the first enrolment date c. Prior to the employer s first enrolment date for any worker, the worker is able to join a qualifying pension scheme with defined benefits if they choose to do so and remains entitled to join a qualifying pension scheme with defined benefits d. The pension scheme with defined benefits or schemes to which the worker is able to join remain a qualifying scheme for the remainder of the transitional period. If they wish to use the transitional period for schemes with defined benefits, the employer must provide the worker with a notice explaining this to them within six weeks of the employer s first automatic enrolment date. If the conditions in C and D above continue to be met, on expiry of the transitional period, the worker, providing they meet the necessary criteria for automatic enrolment, must be automatically enrolled so that they become either: a. an active member of an automatic enrolment pension scheme which is a defined benefits scheme, or b. a defined benefits member of an automatic enrolment pension scheme which is a hybrid scheme. The employer can also choose to use postponement for a period of up three calendar months at the end of the transitional period. continued... A detailed guide to Automatic enrolment for software developers 256

257 3.0 Specification of data/routines for wider business support software Data source: Additional worker data Description of data The employer s first enrolment date is the first day on which any of the employer s workers meet the eligible jobholder criteria. This is likely to be their staging date but may be later. It will correspond to the earliest EJ_ date triggered (see C11). The calculation for determining the deadline (DB_ Phasing_info_due) by when the information must be given is at E9. DB_Phasing_info_giv must be DB_phasing_info_due The payroll-driven content of the information is found at row 10 at Annex B. A template of this notice is available on our website at: D14 Active member information given to a jobholder If on the staging date an eligible jobholder or a noneligible jobholder is already a member of a qualifying pension scheme, the employer is obliged to give them specified information. The employer is also obliged to provide this information to any worker who becomes a jobholder and an active member of a qualifying scheme after the employer s staging date. The employer is only obliged to provide this information once per worker, per employment. If the employer chooses to use postponement in respect of the worker and chooses to use general notice A as the postponement notice, then they will have fulfilled this information requirement for that worker. Where the date that they first become a jobholder and an active member of a qualifying scheme is by virtue of automatic enrolment, re-enrolment or opt in, this information requirement does not apply. The employer must give the information before the end of the period of two calendar months from the staging date or the date on which the worker first becomes a jobholder and an active member. Abbreviation used Memb_QPS_info_giv Recommended field size Date continued... A detailed guide to Automatic enrolment for software developers 257

258 3.0 Specification of data/routines for wider business support software Data source: Additional worker data Description of data The calculation for determining the deadline (Memb_ QPS_info_due) by when the information must be given is at E2. Memb_QPS_info_giv must be Memb_QPS_info_due The payroll-driven content of the information is found at row 3 at Annex B. A template of this notice is available on our website at: D15 D16 First enrolment date Only relevant where the transitional period for schemes with defined benefits is intended to be used. The employer s first enrolment date is the first day on which any of the employer s workers meet the eligible jobholder criteria. This is likely to be their staging date but may be later. It will correspond to the earliest EJ_ date triggered (see C11). Active membership of a QPS achieved through contractual enrolment flag Some employers may choose to: immediately enrol all workers into a pension scheme when they first start work with the employer annually re-enrol workers back into the pension scheme if they have ceased membership in the year. To do this, the employer must obtain the worker s consent to deduct pension contributions and they often use contractual agreements with their staff (for example the contracts of employment) to obtain this consent. We describe this as contractual enrolment. The new employer duties do not prevent an employer from continuing with agreements of this type, nor are they prevented from putting new agreements in place. However, the employer must understand how the employer duties impact on their current processes. Abbreviation used First_enrol_date Recommended field size Date Abbreviation used CE_flag Recommended field size Y/N continued... A detailed guide to Automatic enrolment for software developers 258

259 3.0 Specification of data/routines for wider business support software Data source: Additional worker data Description of data As a minimum they will still have to provide information to any jobholders who are members of the QPS and complete a declaration of compliance with the regulator. This flag is needed for deriving the active member information due to eligible or non-eligible jobholder date (see E2). A detailed guide to Automatic enrolment for software developers 259

260 3.0 Specification of data/routines for wider business support software 3.3 Calculation routines Note 1: References to pay reference period includes reference to either definition of pay reference period for the assessment of workers unless explicitly stated. Note 2: Date means the data is assumed to be in the format dd/mm/yyyy and is a valid date in the Gregorian calendar, although it is for individual systems to decide how dates are held internally. Some of the calculations listed below involve adding or subtracting a number of months to a particular date. Instructions for performing these calculations are provided below: When adding months Add the stated number of months, subtract one day and adjust the year value as necessary eg adding three months to 01/11/2011 and subtracting a day results in 31/01/2012. When subtracting months Subtract the required number of months, add one day and adjust the year value as necessary eg subtracting three months from 31/01/2012 and adding one day results in 01/11/2011. When adding weeks Add the stated number of weeks, subtract one day and adjust the year value as necessary eg adding three weeks to 01/11/2011 and subtracting a day results in 21/11/2011. Note 3: Throughout these data items the deferral date (the end of the postponement period) corresponds to worker postponement + one day or Eligible jobholder postponement + one day Note 4: In this section for any references to an employer, provider or jobholder giving information required under the legislation give has the meaning in the Interpretation Act For more information see the Information to workers resource in the resources section of the detailed guidance on automatic enrolment. Data source: System derived data Description of data E1 Automatic enrolment deadline Following automatic enrolment, re-enrolment and opt in, the employer must take three administrative steps no later than six weeks after the automatic enrolment date, automatic re-enrolment date or enrolment date. The employer must: a. Complete whatever administration is necessary to ensure the jobholder becomes an active member of an automatic enrolment pension scheme (occupational pension scheme) (see D5) or ensure the pension provider has issued the terms and conditions (contract-based pension scheme) (see D4) b. Give the jobholder specified automatic enrolment information (see D3) c. Give the pension scheme specified information about the jobholder. Abbreviation used AE_due Recommended field size Y/N continued... A detailed guide to Automatic enrolment for software developers 260

261 3.0 Specification of data/routines for wider business support software Data source: System derived data Description of data The automatic enrolment deadline is defined as: AE_due = [AE_date +6 weeks] OR [OE_Date +6 weeks] OR [care_date +6 weeks] The payroll-driven content of the information described at B and C is found at rows 1 and 2 of table 2 in Annex B. NB1: Where an employer is using a worker or eligible jobholder postponement period they are permitted to give the information at b) above at the same time that they give a postponement period notice. NB2: Employers must complete the administrative steps for automatic enrolment within six weeks. Where the pay reference period in use is longer than six weeks and pay is not calculated within six weeks of the start of the pay reference period, the employer may need to estimate which workers will become eligible for automatic enrolment and undertake the necessary administrative steps for automatic enrolment within the first six weeks in advance of performing the payroll calculations that will confirm eligibility. In such circumstances employers may wish to make cautious estimates in order to ensure that they do not fail to meet the legal requirements. At the point that payroll is run and eligibility is confirmed the employer can address any cases where a worker turns out to have been mistakenly estimated to be eligible by ensuring that no deduction of pensions contributions is taken and that the worker and pension scheme are informed of the error. continued... A detailed guide to Automatic enrolment for software developers 261

262 3.0 Specification of data/routines for wider business support software Data source: System derived data Description of data E2 Active member information due to a jobholder If on the staging date an eligible jobholder or a noneligible jobholder is already a member of a qualifying pension scheme, the employer is obliged to give them specified information. The employer is also obliged to give this information to any worker who becomes a jobholder and an active member of a qualifying scheme after the employer s staging date. The information must be given to jobholders. Section 2.6 includes separate calculation routines for eligible jobholder status and non-eligible jobholder status in C10 and C12. Both of these are jobholders. The employer is only obliged to give this information once per worker, per employment. The deadline for providing this information is: Memb_QPS_info_due = the earlier of [[EJ_date + two months] OR [JH_date + two months]] IF [Memb_QPS_date EJ_date AND AE_date <> EJ_date] OR [AE_date = EJ-date AND CE_Flag = Y] AND Postpone_A_info_giv is not present Abbreviation used Memb_QPS_info_due Recommended field size Date continued... A detailed guide to Automatic enrolment for software developers 262

263 3.0 Specification of data/routines for wider business support software Data source: System derived data Description of data AND Memb_QPS_info_giv is not present OR [Memb_QPS_date JH_date AND OE_date <> JH_date] AND Postpone_A_info_giv is not present AND Memb_QPS_info_giv is not present The payroll-driven content of the information is found at row 3 in Annex B. E3 Opt-out period start Following automatic enrolment, re-enrolment or opt in, a jobholder may opt out of membership of a qualifying pension scheme and receive a full refund of any contributions deducted. In order to opt out, the jobholder must give a signed, valid opt-out notice to their employer within the specified opt-out period. The rule defining the start of the opt-out period varies depending on whether the jobholder was automatically enrolled into an occupational or a contractbased pension scheme. IF WPP_flag = N, then OptOut_start = the later of [AE_ info_ giv OR Active_memb_complete] IF WPP_flag = Y, then OptOut_start = the later of [AE_ info_giv OR WPP_info_date] Abbreviation used OptOut_start Recommended field size Date continued... A detailed guide to Automatic enrolment for software developers 263

264 3.0 Specification of data/routines for wider business support software Data source: System derived data Description of data NB1: Under the legislation, the jobholder must obtain the opt-out notice from the pension scheme into which they have been automatically enrolled, re-enrolled or enrolled (opt in). This means that the employer must not provide the jobholder with an opt-out directly, unless the employer also administers its own pension scheme. E4 E5 Opt-out period end The opt-out period lasts one calendar month. There is one exception. If the jobholder submits an invalid opt-out notice, the opt-out period is extended to be six weeks. The end of the opt-out period is defined as follows: Where Invalid_OptOut_rec = N, OptOut_end = [OptOut_start + one month] Where Invalid_OptOut_rec = Y, OptOut_end = [OptOut_ start + six weeks] (When adding six weeks, count forward 42 days, OptOut_ start would be day one. OptOut_end would be the 42nd day) Right to opt in information due to jobholder The employer is obliged to give jobholders information that explains their right to opt in to an automatic enrolment pension scheme. This information must be given no later than six weeks after the worker becomes a jobholder with the right to opt in for the first time. The employer is only obliged to give this information once per worker, per employment. Abbreviation used OptOut_end Recommended field size Date Abbreviation used OptIn_info_due Recommended field size Date continued... A detailed guide to Automatic enrolment for software developers 264

265 3.0 Specification of data/routines for wider business support software Data source: System derived data Description of data The information must be given to jobholders. Section 2.6 includes separate calculation routines for eligible jobholder status and non-eligible jobholder status in C10 and C12. Both of these are jobholders. The information must be provided no later than six weeks of the right first applying. For any worker who on the staging date is already a member of a qualifying scheme the right will first apply, if they cease active membership, on the first occasion they become a jobholder (eligible or non-eligible) after membership has ceased. For any eligible jobholder who is automatically enrolled at the employer s staging date and then ceases membership after the opt-out period the right will first apply, if they cease active membership, on the first occasion they become a jobholder (eligible or noneligible) after membership has ceased. For the exceptions to having to issue the information within six weeks of the right first applying see D11. The deadline for providing this information is: OptIn_info_due = [JH date + six weeks] IF JH_flag = Y AND Memb_QPS_flag = N continued... A detailed guide to Automatic enrolment for software developers 265

266 3.0 Specification of data/routines for wider business support software Data source: System derived data Description of data AND JH_date PRP_start AND PRP_end AND Postpone_A_info_giv is not present AND Postpone_B_info_giv is not present AND Postpone_tailor_JH_info_giv is not present AND DB_phasing_info_giv is not present AND OptIn_info_giv is not present] OR OptIn_info_due = [EJ date + six weeks] IF EJ_flag = Y AND Memb_QPS_flag = N AND Wor_postpone_flag = Y AND Postpone_A_info_giv is not present AND Postpone_B_info_giv is not present continued... A detailed guide to Automatic enrolment for software developers 266

267 3.0 Specification of data/routines for wider business support software Data source: System derived data Description of data AND Postpone_tailor_JH_info_giv is not present AND DB_phasing_info_giv is not present AND OptIn_info_giv is not present] OR OptIn_info_due = [End_pension_date + one day + six weeks] IF [JH_flag = Y OR EJ_flag = Y] AND Memb_QPS_flag = N AND Memb_QPS_date is present AND OptOut_date is not present] AND Postpone_A_info_giv is not present AND Postpone_B_info_giv is not present AND Postpone_tailor_JH_info_giv is not present continued... A detailed guide to Automatic enrolment for software developers 267

268 3.0 Specification of data/routines for wider business support software Data source: System derived data Description of data AND DB_phasing_info_giv is not present AND OptIn_info_giv is not present] When adding six weeks, count forward 42 days JH_ date, EJ-date or End_pension_date plus one day (as appropriate) would be day one. Optin_info_due would be the 42nd day. The payroll-driven content of the information is found at row 2 at Annex B. NB1: We do not explicitly consider here whether employment end or the 75th birthday have passed on the date the right to opt in first arises. This is because the calculation routines in C10 and C12 for eligible jobholder status and non-eligible jobholder status will only run if employment end (B16) or 75 date (C4) is not passed on the assessment date. E6 Right to join information due to worker The employer is obliged to give entitled workers, who are not already contributing to a workplace pension scheme, information that explains their right to join a pension scheme (there is no duty on the employer to provide a qualifying pension scheme with employer contributions for such workers). This information must be given within six weeks of a person becoming an entitled worker for that employer. The employer is only obliged to give this information once per worker, per employment. Abbreviation used Notice_join_info_due Recommended field size Date continued... A detailed guide to Automatic enrolment for software developers 268

269 3.0 Specification of data/routines for wider business support software Data source: System derived data Description of data The information must be provided no later than six weeks of the right first applying. For any worker who on the staging date is already a member of a qualifying scheme the right will first apply, if they cease active membership, on the first occasion they become an entitled worker after membership has ceased. For any eligible jobholder who is automatically enrolled and then ceases membership after the opt-out period the right will first apply, if they cease active membership, on the first occasion they become an entitled worker after membership has ceased. The deadline for providing this information is: Notice_join_info_due = [Wor date + six weeks] IF Wor_flag = Y AND Memb_QPS_flag = N AND Wor_date PRP_start AND PRP_end AND Postpone_A_info_giv is not present AND Postpone_B_info_giv is not present AND Postpone_tailor_wor_info_giv is not present AND Notice_join_info_giv is not present continued... A detailed guide to Automatic enrolment for software developers 269

270 3.0 Specification of data/routines for wider business support software Data source: System derived data Description of data OR Notice_join_info_due = [End_pension_date + one day + six weeks] IF Wor_flag = Y AND Memb_QPS = N AND Memb_QPS_date is present AND Postpone_A_info_giv is not present AND Postpone_B_info_giv is not present AND Postpone_tailor_wor_info_giv is not present AND Notice_join_info_giv is not present When adding six weeks, count forward 42 days Wor_date or End_pension_date plus one day (as appropriate)would be day one. Notice_join_info_due would be the 42nd day. The payroll-driven content of the information is found at row 2 at Annex B. NB1: We do not explicitly consider here whether employment end or the 75th birthday have passed on the date the right to opt in first arises. This is because the calculation routine in C13 for entitled worker status will only run if employment end (B16) or 75 date (C4) is not passed on the assessment date. A detailed guide to Automatic enrolment for software developers 270

271 3.0 Specification of data/routines for wider business support software Data source: System derived data Description of data E7 E7A The Pensions Regulator declaration of compliance due Shortly after they become subject to the duties for the first time, the employer is obliged to submit information to us giving details of how they have discharged their duties. This is called declaration of compliance. The deadline for the employer to declare their compliance is determined as follows: TPR_reg_due = [Duty_start + five calendar months.] Where the staging period has ended the deadline for the employer to declare their compliance is five months from the day that PAYE income first becomes payable in respect of any worker. The Pensions Regulator re-declaration due Broadly every three years, the employer is obliged to submit information to us giving details of how they have discharged their re-enrolment duties. This is called redeclaration of compliance. The deadline for the employer to re-declare is determined as follows: A If the employer has any eligible jobholder that they must automatically re-enrol: TPR_re-reg_due = [care_date + two calendar months.] OR B If the employer has no eligible jobholders to be automatically re-enrolled: TPR_re-reg_due = date of previous declaration + 36 calendar months Abbreviation used TPR_reg_due Recommended field size Date Abbreviation used TPR_re-reg_due Recommended field size Date A detailed guide to Automatic enrolment for software developers 271

272 3.0 Specification of data/routines for wider business support software Data source: System derived data Description of data E8 Postponement period notice due Where the employer wishes to use either the worker postponement period or the eligible jobholder postponement period, they must provide the worker with a postponement period notice. The regulations set out a number of mandatory pieces of information that must be included in the various options for the notice (see D7 to D10 for a description of the different options for the postponement notice). The deadline for providing this information is either: [The latest of [Duty_start + one day +six weeks] OR [Employment_start + one day +six weeks] OR [DB_phasing_end + two days + six weeks] IF Wor_postpone_flag = Y] OR [The latest of [EJ_date + one day +six weeks] OR [EJ_repeat_date + one day +six weeks] IF EJ_postpone_flag = Y] Abbreviation used Postpone_info_due Recommended field size Date continued... A detailed guide to Automatic enrolment for software developers 272

273 3.0 Specification of data/routines for wider business support software Data source: System derived data Description of data When adding six weeks, count forward 42 days, Duty_ Start, Employment_start, [DB_phasing_end + one day], EJ_date or EJ_repeat_date (as appropriate) would be day one. Postpone_info_due would be the 42nd day. The payroll-driven content of the postponement period notice options is found at rows 6-9 in Annex B. E9 DB phasing information due to eligible jobholder Where the employer wishes to use the transitional period schemes with defined benefits for an eligible jobholder at their first enrolment date, they must provide the worker with a notice. The regulations set out a number of mandatory pieces of information that must be included in the various options for the notice. The deadline for providing this information is: [First_ enrolment_date + six weeks] When adding six weeks, count forward 42 days, First_ enrolment_date would be day one. DB_phasing_info_ due would be the 42nd day. The payroll-driven content of the notice is found at row 10 in Annex B. Abbreviation used DB_phasing_info_due Recommended field size Y/N A detailed guide to Automatic enrolment for software developers 273

274 3.0 Specification of data/routines for wider business support software 3.4 Report capabilities Employers may require their wider business software systems to produce reports listing certain categories of workers. These output/reports from the system will be needed as inputs/prompts for the employer to take further action in order to comply with remaining aspects of the duties around the provision of information. Reports listing workers with 1 Where Wor_postpone_flag = Y for the first time 2 Where EJ_postpone_flag turns from N to Y 3 Memb_QPS_info_due is present for the first time 4 OptIn_info_due is present for the first time 5 Notice_join_info_due is present for the first time 6 DB_phasing_info_due is present for the first time For these workers the employer must Provide the worker (irrespective of worker, jobholder or eligible jobholder status) with the postponement period notice (see D6-8 and E8) Provide the eligible jobholder with the postponement period notice (see D9 and E8) Provide the jobholder with information about the qualifying pension scheme of which they are an active member (see E2) Provide the jobholder within specified timescales with information about the right to opt in to an automatic enrolment scheme (see E5) Provide the entitled worker within specified timescales with information about the right to join a scheme (see E6) Provide the eligible jobholder within specified timescales with information about the transitional period for schemes with defined benefits (see E9) A detailed guide to Automatic enrolment for software developers 274

275 3.0 Specification of data/routines for wider business support software 3.5 Record-keeping requirements The employer is obliged to keep a number of records in relation to their compliance for six years and may authorise a third party to keep, preserve or provide the records on their behalf. Data generated by payroll systems using the calculations in this section that may support the employer in meeting the record-keeping requirements follows. The only required records that are directly generated by the data and calculations in this section are: Postpone_A_info_giv where present Postpone_B_info_giv where present Postpone_tailor_JH_info_giv where present Postpone_tailor_wor_info_giv where present Wherever any of the above are present the employer is also obliged to keep a record of the name and National Insurance number of the worker to whom the record relates, ie the worker to whom the postponement period notice was given. In addition, there are a number of records that an employer is obliged to keep that could be archived within an employer s software system: a. Each opt-in notice submitted by any jobholder b. Each joining notice submitted by any worker c. Each opt-out notice submitted by any jobholder (NB records of optout notices are only obliged to be kept for four years). Records A to C (shown above) may be submitted to the regulator in paper or electronic format. A detailed guide to Automatic enrolment for software developers 275

276 Annex A Pay reference period calendars where the definition of pay reference periods is aligned with tax weeks or months The pay reference periods for pay reference periods which are equal in length to a week, fortnight, or four week period, and a month, quarter (three months), bi-annual (six months) or annual period are listed here. If the length of the pay reference period is not one of these the pay reference period calendar will have to be derived. See paragraphs 120 to 143 for more information. Weekly Tax week Non-leap year PRP Leap year PRP 1 6 Apr to 12 Apr 6 Apr to 12 Apr 2 13 Apr to 19 Apr 13 Apr to 19 Apr 3 20 Apr to 26 Apr 20 Apr to 26 Apr 4 27 Apr to 3 May 27 Apr to 3 May 5 4 May to 10 May 4 May to 10 May 6 11 May to 17 May 11 May to 17 May 7 18 May to 24 May 18 May to 24 May 8 25 May to 31 May 25 May to 31 May 9 1 Jun to 7 Jun 1 Jun to 7 Jun 10 8 Jun to 14 Jun 8 Jun to 14 Jun Jun to 21 Jun 15 Jun to 21 Jun Jun to 28 Jun 22 Jun to 28 Jun Jun to 5 Jul 29 Jun to 5 Jul 14 6 Jul to 12 Jul 6 Jul to 12 Jul Jul to 19 Jul 13 Jul to 19 Jul Jul to 26 Jul 20 Jul to 26 Jul continued... A detailed guide to Automatic enrolment for software developers 276

277 Annex A Jul to 2 Aug 27 Jul to 2 Aug 18 3 Aug to 9 Aug 3 Aug to 9 Aug Aug to 16 Aug 10 Aug to 16 Aug Aug to 23 Aug 17 Aug to 23 Aug Aug to 30 Aug 24 Aug to 30 Aug Aug to 6 Sep 31 Aug to 6 Sep 23 7 Sep to 13 Sep 7 Sep to 13 Sep Sep to 20 Sep 14 Sep to 20 Sep Sep to 27 Sep 21 Sep to 27 Sep Sep to 4 Oct 28 Sep to 4 Oct 27 5 Oct to 11 Oct 5 Oct to 11 Oct Oct to 18 Oct 12 Oct to 18 Oct Oct to 25 Oct 19 Oct to 25 Oct Oct to 1 Nov 26 Oct to 1 Nov 31 2 Nov to 8 Nov 2 Nov to 8 Nov 32 9 Nov to 15 Nov 9 Nov to 15 Nov Nov to 22 Nov 16 Nov to 22 Nov Nov to 29 Nov 23 Nov to 29 Nov Nov to 6 Dec 30 Nov to 6 Dec 36 7 Dec to 13 Dec 7 Dec to 13 Dec Dec to 20 Dec 14 Dec to 20 Dec Dec to 27 Dec 21 Dec to 27 Dec Dec to 3 Jan 28 Dec to 3 Jan 40 4 Jan to 10 Jan 4 Jan to 10 Jan Jan to 17 Jan 11 Jan to 17 Jan Jan to 24 Jan 18 Jan to 24 Jan continued... A detailed guide to Automatic enrolment for software developers 277

278 Annex A Jan to 31 Jan 25 Jan to 31 Jan 44 1 Feb to 7 Feb 1 Feb to 7 Feb 45 8 Feb to 14 Feb 8 Feb to 14 Feb Feb to 21 Feb 15 Feb to 21 Feb Feb to 28 Feb 22 Feb to 28 Feb 48 1 Mar to 7 Mar 29 Feb to 6 Mar 49 8 Mar to 14 Mar 7 Mar to 13 Mar Mar to 21 Mar 14 Mar to 20 Mar Mar to 28 Mar 21 Mar to 27 Mar Mar to 4 Apr 28 Mar to 3 Apr 5 Apr to 5 Apr or 5 Apr to 11 Apr 4 Apr to 5 Apr or 4 Apr to 10 Apr Fortnightly Tax weeks Non-leap year PRP Leap year PRP 1 & Apr to 19 Apr 6 Apr to 19 Apr 3 & 4 20 Apr to 3 May 20 Apr to 3 May 5 & 6 4 May to 17 May 4 May to 17 May 7 & 8 18 May to 31 May 18 May to 31 May 9 & 10 1 Jun to 14 Jun 1 Jun to 14 Jun 11 & Jun to 28 Jun 15 Jun to 28 Jun 13 & Jun to 12 Jul 29 Jun to 12 Jul 15 & Jul to 26 Jul 13 Jul to 26 Jul 17 & Jul to 9 Aug 27 Jul to 9 Aug 19 & Aug to 23 Aug 10 Aug to 23 Aug 21 & Aug to 6 Sep 24 Aug to 6 Sep 23 & 24 7 Sep to 20 Sep 7 Sep to 20 Sep continued... 7 We understand that normal payroll practice would be for this period to show as week 2. However, for automatic enrolment the first day of a pay reference period is a key date and that is why it is shown here as tax week 1 and 2, and the equivalent in the remainder of the table. A detailed guide to Automatic enrolment for software developers 278

279 Annex A 25 & Sep to 4 Oct 21 Sep to 4 Oct 27 & 28 5 Oct to 18 Oct 5 Oct to 18 Oct 29 & Oct to 1 Nov 19 Oct to 1 Nov 31 & 32 2 Nov to 15 Nov 2 Nov to 15 Nov 33 & Nov to 29 Nov 16 Nov to 29 Nov 35 & Nov to 13 Dec 30 Nov to 13 Dec 37 & Dec to 27 Dec 14 Dec to 27 Dec 39 & Dec to 10 Jan 28 Dec to 10 Jan 41 & Jan to 24 Jan 11 Jan to 24 Jan 43 & Jan to 7 Feb 25 Jan to 7 Feb 45 &46 8 Feb to 21 Feb 8 Feb to 21 Feb 47 & Feb to 7 Mar 22 Feb to 6 Mar 49 & 50 8 Mar to 21 Mar 7 Mar to 20 Mar 51 & Mar to 4 Apr 21 Mar to 3 Apr 5 Apr to 5 Apr or 5 Apr to 18 Apr 4 Apr to 5 Apr or 4 Apr to 17 Apr Four-weekly Tax weeks Non-leap year PRP Leap year PRP Apr to 3 May 6 Apr to 3 May May to 31 May 4 May to 31 May Jun to 28 Jun 1 Jun to 28 Jun Jun to 26 Jul 29 Jun to 26 Jul Jul to 23 Aug 27 Jul to 23 Aug Aug to 20 Sep 24 Aug to 20 Sep Sep to 18 Oct 21 Sep to 18 Oct continued... 8 We understand that normal payroll practice would be for this period to show as week 4. However, for automatic enrolment the first day of a pay reference period is a key date and that is why it is shown here as tax week 1 to 4, and the equivalent in the remainder of the table. A detailed guide to Automatic enrolment for software developers 279

280 Annex A Oct to 15 Nov 19 Oct to 15 Nov Nov to 13 Dec 16 Nov to 13 Dec Dec to 10 Jan 14 Dec to 10 Jan Jan to 7 Feb 11 Jan to 7 Feb Feb to 7 Mar 8 Feb to 6 Mar Mar to 4 Apr 7 Mar to 3 Apr 5 Apr to 5 Apr or 5 Apr to 2 May 4 Apr to 5 Apr or 4 Apr to 1 May Monthly Tax month PRP 1 6 Apr to 5 May 2 6 May to 5 Jun 3 6 Jun to 5 Jul 4 6 Jul to 5 Aug 5 6 Aug to 5 Sep 6 6 Sep to 5 Oct 7 6 Oct to 5 Nov 8 6 Nov to 5 Dec 9 6 Dec to 5 Jan 10 6 Jan to 5 Feb 11 6 Feb to 5 Mar 12 5 Mar to 5 Apr A detailed guide to Automatic enrolment for software developers 280

281 Annex A Quarterly Tax months PRP Apr to 5 Jul Jul to 5 Oct Oct to 5 Jan Jan to 5 Apr Bi-annually Tax months PRP Apr to 5 Oct Oct to 5 Apr Annually Tax months PRP Apr to 5 Apr A detailed guide to Automatic enrolment for software developers 281

282 Annex B Data driven from software systems for inclusion in information packages The employer is obliged to provide specified groups of workers with information about how they are affected by the duties. This list only covers the data items for inclusion in the information packages that can be supported by software systems. It does not provide an exhaustive list of the information items. More information about duties can be found on the regulator s website in the resource section of the detailed guidance on automatic enrolment. Letter templates for each information package are also available for employers to use at writing. Information package 1 Automatic enrolment information (see E1) 2 Jobholder information to qualifying pension scheme (see E5) Systems-driven data items for inclusion Latest instance of Cont_date (see C16) OptOut_start (if available) OptOut_end (if available) Name DoB Postal residential address Gender Latest instance of Cont_date (see C16) National Insurance Number Sum_PRP in current period (ie as at last payroll run date) (see C7)* Postal work address* Individual work address (where this exists)* Personal address (where available)* 3 Active member information (see E2) No systems-driven data is required for this information package continued... *These data items do not need to be provided if the pension scheme has told the employer they do not need them. A detailed guide to Automatic enrolment for software developers 282

283 Annex B 4 Opt in information (see E5) 5 Right to join information (see E6) 6 Postponement period General Notice A (see D7) 7 Postponement period General Notice B (see D8) 8 Postponement period Tailored for Jobholder Notice (see D9) 9 Postponement Period Tailored Notice for Entitled Worker (see D10) 10 DB Phasing information (see D11) No systems-driven data is required for this information package No systems-driven data is required for this information package Latest instance of [Wor_postpone_end + one day] Latest occurring value held for [Wor_postpone_end + one day] Latest occurring value held for EITHER [Wor_postpone_end + one day] OR [EJ_postpone_end + one day] Latest occurring value held for [Wor_postpone_end + one day] No systems-driven data is required for this information package NB: For information packages at rows 1, 2, 4, 5, 6, 7, and 8 the employer is also obliged to include information about the worker and employer pension contribution rates. The employer is able to provide the percentage rates or the cash values of contributions. Depending on how the employer wishes to discharge this aspect of the information duty, there may be a further role for payroll to produce supporting data. A detailed guide to Automatic enrolment for software developers 283

284 Annex C Changes made since the last version of this guidance This version has been updated with the qualifying earnings thresholds and earnings trigger for automatic enrolment figures for the tax year. The data sources at A2-A4 have been updated. As a result of the changes in these figures, we have made some minor changes to some of the qualifying earning figures used in some of the examples. All the footnote references to the change in legislation for the information deadlines to six weeks from one month have been removed. The content for developers who have already built their systems and who would only be interested in some of the recent technical changes to the legislation has been moved to a separate document. As a result some of the paragraph numbers may have changed. We have added some explanatory content to C16 covering when the scheme is a minimum requirement pension scheme and the definition of a pay reference period (contribution entitlement) is either aligned to tax weeks or months or the period by reference to which the worker is paid their regular wage or salary. There have been no other changes to the data sources and calculation routines. (This does not include minor editorial changes to the explanatory text) A detailed guide to Automatic enrolment for software developers 284

285 How to contact us If you have any queries, please us at A detailed guide to Automatic enrolment for software developers The Pensions Regulator March 2014 You can reproduce the text in this publication as long as you quote The Pensions Regulator s name and title of the publication. Please contact us if you have any questions about this publication. We can produce it in Braille, large print or on audio tape. We can also produce it in other languages.