DWP reviews auto-enrolment legislation prior to finalisation of Pensions Bill

The Department for Work and Pensions (DWP) is reviewing the draft regulations relating to auto-enrolment prior to the finalisation of the Pensions Bill.

The DWP is consulting informally on the regulations with a view to a formal consultation once the bill receives royal assent.

For employers that operate variable pay, the DWP is proposing a three-tier test based on the previous year’s earnings data:

Tier one: a 9% contribution of basic pay (inclusive of a 4% employer contribution) for jobholders in the scheme.

Tier two: an 8% contribution of basic pay (inclusive of a 3% employer contribution) for jobholders in the scheme, provided that pensionable pay constitutes at least 85 % of the pay bill.

Tier three: a 7% contribution of pay (with a 3% employer contribution). All pay must be pensionable.

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