Employment Tax

Automatic enrolment ― what types of scheme may be used

Produced by Tolley
  • 01 Nov 2021 12:42

The following Employment Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Automatic enrolment ― what types of scheme may be used
  • Qualifying schemes
  • Using 'NEST' or other master trust schemes
  • Overseas schemes
  • Defined benefit occupational pension schemes
  • Defined contribution schemes
  • Defined contribution occupational pension schemes
  • Personal pension schemes
  • Hybrid schemes
  • Phasing in of minimum contribution levels
  • More...

Automatic enrolment ― what types of schememay be used


The automatic enrolment regime requires employers to enrol workers automatically in a pension schemethat meets at least minimum standards (known as a ‘qualifying scheme’). In the case of a defined contribution scheme, those standards include mandatory employer and worker contributions of at least minimum amounts.

In considering what schemeto use, the employer should be aware of the minimum standards that apply for a schemeto be 'qualifying'. The Pensions Regulator has issued detailed guidance for employers to help employers meet their responsibilities under automatic enrolment ('TPR Guidance'), including information on the criteria for qualifying schemes.

For further information on the automatic enrolment regime, see the Automatic enrolment ― overview guidance note.

For further information on categories of worker, see the Automatic enrolment ― who needs to be enrolled guidance note.

Qualifying schemes

As regards to the type of pension schemenominated by the employer for automatic enrolment purposes, the schememust be a ‘qualifying scheme’ (ie a schemethat meets certain minimum standards under the automatic enrolment legislation).

A qualifying schememust be either:

  1. an occupational pension scheme

  2. a personal pension scheme

PenA 2008, ss 18–19

In terms of benefit structure, a qualifying schemecan be either:

  1. a defined benefit (DB) scheme

  2. a defined contribution (DC) scheme

  3. a hybrid scheme(that is, an occupational pension schemewith both DB and DC characteristics)

There are minimum standards that must be met, which vary for each type of scheme.

To meet the qualifying schemerequirements, employers may use:

  1. an existing scheme

  2. a new scheme

  3. both

There is no requirement in the legislation for an employer to enrol all their workers in a single scheme― an employer can tailor the pension arrangements offered to various groups of employees according to business need, so long as the employer can meet their obligations under automatic enrolment in respect of each worker.

PenA 2008, s

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