The Qualifying Earnings Bands and Earnings Trigger for 2019/20

UK payroll and software developer professionals always await the above figures before the start of the tax year:

• The qualifying earnings bands (upper and lower limits) define the portion of earnings on which contribution are calculated if the employer operates this type of pension scheme for auto enrolment
• The earnings trigger is the point at which this level of qualifying earnings in the pay reference period determine whether or not the worker should be automatically enrolled into the pension.

So, the earnings bands could be important from the point of view of knowing what band of earnings to take pension contributions on.  But together the earnings bands and trigger allow the employer to assess the worker, remembering it is only the eligible jobholder that is auto enrolled into a pension scheme. 

On the 4^th of December 2018 the Department of Work and Pensions (DWP) published their annual review of the above values in advance of the start of the 2019/20 tax year.  It has proposed that:

• The qualifying earnings bands should stay aligned with the National Insurance LEL and UEL values and
• The earnings trigger should remain unchanged at £10,000

So assuming that this makes its way into legislation, we are looking at the following values for 2019/20 (compared to those that applied for 2018/19):

The 2017 DWP report “Maintaining the Momentum” proposed that the government should remove the lower qualifying earnings band and that contributions should be calculated from the first £1 of qualifying earnings.  The 2018 review says that this is still the government’s intention but not until the “mid 2020s”.  Removing this band would also have the consequence of more workers being automatically enrolled.

The Global Payroll Association will watch for approval of the above for 2019/20 and setting them in legislation, at which time the Pensions Regulator will be able to advise the values that apply per pay period.

UK payroll and software developer professionals always await the above figures before the start of the tax year:

• The qualifying earnings bands (upper and lower limits) define the portion of earnings on which contribution are calculated if the employer operates this type of pension scheme for auto enrolment
• The earnings trigger is the point at which this level of qualifying earnings in the pay reference period determine whether or not the worker should be automatically enrolled into the pension.

So, the earnings bands could be important from the point of view of knowing what band of earnings to take pension contributions on.  But together the earnings bands and trigger allow the employer to assess the worker, remembering it is only the eligible jobholder that is auto enrolled into a pension scheme. 

On the 4^th of December 2018 the Department of Work and Pensions (DWP) published their annual review of the above values in advance of the start of the 2019/20 tax year.  It has proposed that:

• The qualifying earnings bands should stay aligned with the National Insurance LEL and UEL values and
• The earnings trigger should remain unchanged at £10,000

So assuming that this makes its way into legislation, we are looking at the following values for 2019/20 (compared to those that applied for 2018/19):

The 2017 DWP report “Maintaining the Momentum” proposed that the government should remove the lower qualifying earnings band and that contributions should be calculated from the first £1 of qualifying earnings.  The 2018 review says that this is still the government’s intention but not until the “mid 2020s”.  Removing this band would also have the consequence of more workers being automatically enrolled.

The Global Payroll Association will watch for approval of the above for 2019/20 and setting them in legislation, at which time the Pensions Regulator will be able to advise the values that apply per pay period.