{"id":1595,"date":"2017-07-17T11:32:19","date_gmt":"2017-07-17T11:32:19","guid":{"rendered":"https:\/\/www.sage.com\/en-gb\/blog\/automatic-enrolment-jargon-buster\/"},"modified":"2026-01-29T10:53:34","modified_gmt":"2026-01-29T10:53:34","slug":"automatic-enrolment-jargon-buster","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-gb\/blog\/automatic-enrolment-jargon-buster\/","title":{"rendered":"Automatic enrolment jargon buster"},"content":{"rendered":"
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\n\t\t\t\t\t\t\tStrategy, Legal & Operations<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t
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\n\t\t\t\t\t\tAutomatic enrolment jargon buster\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t

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\n\t\t\t\n\t\t\t\t\"\"\t\t\t\tBryan Collins<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\n\n

This jargon buster helps explain some of the terms that The Department of Work & Pensions and The Pensions Regulator are using when talking about auto enrolment… in plain English!<\/strong><\/p>\n\n\n\n

As a small business owner we know that you wear many hats and spin many plates. So, to save you time (and considerable headaches), we’ve taken the complex terms and translated them into something that makes sense.<\/p>\n\n\n\n

Automatic enrolment<\/h3>\n\n\n\n

A new type of work-based pension that automatically enrols anyone who qualifies for the scheme. Often shortened to “Auto Enrolment”. Read more about auto enrolment.<\/a><\/p>\n\n\n\n

Defined Contribution scheme<\/h3>\n\n\n\n

You need to examine whether or not your existing scheme qualifies for automatic enrolment according to the rules set by the Department for Work and Pensions.<\/p>\n\n\n\n

Eligible worker<\/h3>\n\n\n\n

Employees working in the UK, above the age of 22 and below the state pension age earning more than \u00a310,000 (the figure will be reviewed every year). Employees meeting these criteria must be auto enrolled. Find out more about employee eligibility.<\/p>\n\n\n\n

Entitled worker<\/h3>\n\n\n\n

These employees have the right to join the pension scheme if they wish, as long as they’re aged 16 – 74; working in the UK and earning below \u00a35,772. (The employer only has to make a contribution for entitled workers if it is part of their contract of employment.)<\/p>\n\n\n\n

Inducement<\/h3>\n\n\n\n

All employees that meet the criteria above MUST be auto enrolled and unless they opt out (see below), the employer must also make contributions (also see below) to their pension pot. Inducement is when an employer encourages an employee to opt-out of an automatic pension scheme, this is illegal!<\/p>\n\n\n\n

NEST<\/h3>\n\n\n\n

NEST (National Employment Saving Trust<\/a>) is a pension scheme that must take all employers who apply to join. This is because it is a government scheme that has been created to guarantee that employers that employ low earners can access pension saving and fulfil their automatic enrolment compliance duties.<\/p>\n\n\n\n

Non-eligible worker<\/h3>\n\n\n\n

These are employees who are either:<\/p>\n\n\n\n