Briefing Notes

Briefing Note 48 - What should qualify as earnings for auto-enrolment?

There has been much discussion as to the appropriate definition of earnings that should be used as the basis of auto-enrolment into work-place pens ion schemes in the 2008 Pensions Bill. While the Government, using the recommendation made by the Pensions Commission, has put forward legislation to base the minimum auto-enrolled employee and employer contributions on all earnings (including bonus and overtime payments) between £5,035 and £33,540 (in 2006 earnings terms), other stakeholders have suggested that minimum contributions should be based on any basic earnings (excluding bonus and overtime payments) but from the first £1 earned.

This Briefing Note looks at the rationales, advantages and disadvantages of this and other proposed alternatives, including the recent proposals the Government have put forward in amendments to the 2008 Pensions Bill.