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What are "Qualifying Earnings" under auto enrolment?

Article ID
11456
Article Name
What are "Qualifying Earnings" under auto enrolment?
Created Date
27th February 2019
Product
IRIS PAYE-Master, IRIS Payroll Business, IRIS Bureau Payroll, IRIS GP Payroll, IRIS Payroll Professional, Earnie, IRIS Earnie IQ
Problem

What are "Qualifying Earnings" under auto enrolment?

Resolution

Information provided by the pension regulator

Only the pay components within the definition of qualifying earnings in section 13 of the Pensions Act 2008 are included for the purpose of determining qualifying earnings.

‘Qualifying earnings’ is a reference to earnings between £6,136 and £50,000 (as of 19/20 tax year) made up of any of the following components of pay that are due to be paid to the member of staff:

  • Salary
  • Wages
  • Commission
  • Bonuses
  • Overtime
  • Statutory sick pay
  • Statutory maternity pay
  • Statutory paternity pay
  • Statutory shared partenal pay
  • Statutory adoption pay

It is for you to determine if a payment you’re making falls into one of the components of pay that make up qualifying earnings. You’ll need to assess all elements of pay and make a reasonable judgement as to whether each pay element fits within the definition of qualifying earnings in section 13. If you’re unsure, you may wish to seek legal advice.

For more information, please see the pension regulators detailed guidance for assessing the workforce (PDF, 223kb, 58 pages) (see page 20).

Qualifying Earnings are the earnings used to assess whether a worker earns enough to be automatically enrolled (providing all the other eligible jobholder criteria are met).

Pensionable Earnings are dependent on your pension scheme. Your pension scheme may state the pension deduction is calculated only on the employee’s salary. If so, you should go to Pension | Configure Earnings |Pensionable Earnings and make sure the box is ticked for Salary. See the Pension Guide for more information.

IRIS support cannot advise you what pay elements are classed as pensionable. Your pension provider can provide assistance with this.

For further auto enrolment FAQs click here

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