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What are insufficient earnings? AE FAQs

Article ID
12103
Article Name
What are insufficient earnings? AE FAQs
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

Some of the employees in my Pension export are listed as having insufficient earnings, what does this mean? 

Resolution

An employee listed as having insufficient earnings is being paid below the level at which AE contributions will be taken.

That is the combined “Qualifying Earnings” for the employee fall below the “Lower Earnings Limit“. In this situation employees’ who have previously been enrolled will make no contributions for the period as they aren’t being paid enough. They will remain enrolled in the scheme, and, if their earnings increase in future periods, above the Lower Earning Limit, pension contributions will then be taken.

For the tax year 2019/20 the Lower Earnings Limit for each pay frequency is:

Weekly: £118
2-Weekly: £236
4-Weekly: £472
Monthly: £512
Annually: £6,136

If you are using the Calculation basis “Qualifying (banded) Earnings” for automatic enrolment, your payroll software will automatically apply the lower limits listed above.

If you are using the calculation basis “Pensionable Earnings” for automatic enrolment, your payroll software WILL NOT apply the lower limits listed above. Instead, it will calculate the percentage contribution based on the sum of pensionable earnings without applying the lower or upper limits.

If you are unsure which calculation basis you should use you will need to confirm this with your pension provider.

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