What are qualifying earnings?

Qualifying earnings at a glance Qualifying earnings are all an employee’s earnings between a lower and upper limit set by the government and reviewed each year.

What are qualifying earnings for 2021 22?

Earnings thresholds for 2021-22

Pay reference period
2021 – 2022	Annual	Bi-annual
Lower level of qualifying earnings	£6,240	£3,120
Earnings trigger for automatic enrolment	£10,000	£4,998
Upper level of qualifying earnings	£50,270	£25,135

What is pension lower earnings limit?

The amount of earnings that allow an employee to qualify for certain state benefits (such as qualifying years for the basic state pension). The lower earnings limit is set each tax year by the government.

How do I calculate my qualifying earnings contributions?

If you calculate contributions using qualifying earnings, you’ll need to use the threshold. You’ll need to subtract the threshold from the total pay to get the pensionable pay for the worker and then calculate the contributions basis the contribution level you’ve set for the worker.

What’s the difference between qualifying earnings and pensionable earnings?

Qualifying earnings is a basis used to calculate your workplace pension contributions. At the same time, pensionable earnings are the total of a basic salary plus other forms of remuneration owed.

Is holiday pay part of qualifying earnings?

If you’re using total earnings or qualifying earnings, the below list of earnings are all pensionable, including holiday pay.

What is the lower earnings limit 2020 21?

Class 1 — Employee and employer

	2021/22	2020/21
Earnings	Weekly	Annual
Lower Earnings Limit (LEL)	£120	£6,240
Earnings Threshold(ET)
– Primary Threshold (PT)	£184	£9,500

What is the difference between qualifying earnings and pensionable earnings?

What does Earnings at the LEL mean?

Lower Earnings Limit
Lower Earnings Limit (LEL) This is the minimum a person must earn in order to qualify for any state benefits or statutory payments. If an employee’s earnings reach or exceed this level, but do not exceed the Primary Threshold, they will not pay NICs but will be treated as having paid NICs when claiming state benefits.

What is the average employer pension contribution in UK?

Employer pension contributions can vary massively across different industries and different companies. A really generous, good employer pension contribution could be as much as 20% of your annual salary. But on average, you could expect between 7% – 14% contribution from your employer in the private sector.

Is SSP included in qualifying earnings?

Yes. Automatic enrolment legislation requires Statutory Sick Pay (SSP) to be treated as part of qualifying earnings. During sick leave, pension contributions paid by both employers and employees are based on the employee’s actual earnings.

What does LEL mean on P60?

bands on the P60: — earnings at the Lower Earnings Limit (LEL) (where earnings are equal to or exceed the LEL) — earnings above the LEL, up to and including the. Primary Threshold (PT)

What is the upper level of qualifying earnings?

Upper level of qualifying earnings: If a worker is paid weekly and earned £2000, you’ll only consider the upper level threshold of £962 and subtract the lower level threshold of £118 (£962 minus £118) to get the pensionable pay of £844. You’ll then need to calculate the contributions based on that amount.

How does the lower limit of the qualifying earnings band work?

The lower limit of the qualifying earnings band sets the minimum amount that people must earn before their employer can start to calculate their pension contributions and include the minimum employer contributions. It therefore determines the lower level of an enrolled workers’ earnings on which they and their employer have to pay contributions.

How are qualifying earnings calculated for auto enrolment?

Qualifying earnings are the minimum basis for calculating auto enrolment contributions for your employees. They’re all the earnings between a lower and upper limit that’s set by the government and reviewed each year. Although there are other ways to work out contributions, we use the minimum level as our standard contribution model 101.