The Department for Work and Pensions (DWP) has today announced the outcome of its consultation on workplace pension reform (WPR) earnings thresholds for 2013/14. The figures that the Government will use for WPR compliance for the tax year beginning 6 April 2013 are as follows:
- the automatic enrolment earnings trigger - this was £8,105 in the 2012/13 tax year and will increase to £9,440 for the tax year 2013/14. This ensures the threshold is aligned with that for Pay As You Earn (PAYE) (and therefore the threshold at which income tax is payable);
- the lower limit of the qualifying earnings band - this was £5,564 in the 2012/13 tax year and will increase to £5,668 for the tax year 2013/14. As a result, the lower limit remains aligned with the lower earnings limit for National Insurance purposes; and
- the upper limit of the qualifying earnings band - this was £42,475 in the 2012/13 tax year and will fall to £41,450 for the tax year 2013/14. This ensures that the upper limit remains aligned with the upper earnings limit for National Insurance purposes.
More detail on the outcome of the consultation is contained in the consultation response document, available from the DWP's website.
In changing the figures from the start of the next tax year and ensuring these are aligned with other payroll and PAYE figures, the DWP has signalled its intention to make the change as administratively simple as possible for employers.
This will be welcome news. As noted in our alert earlier this week, employers are having to deal with these changes at a crucial time when they are designing payroll systems and drafting communications for their workforce. The challenge will be greatest for those with March and April 2013 staging dates.
Employers with between 10,000 and 19,999 workers in their largest PAYE scheme will have a staging date of 1 March 2013. Initially, they will have to communicate with their workforce based on the 2012/13 threshold figures still in force, but also convey that these will change from 6 April 2013.
The situation is potentially even more difficult for those employers with between 6,000 and 9,999 workers in their largest PAYE scheme. They will have a staging date of 1 April 2013 and will be subject to employer duties based on the 2012/13 figures but will then shift to the 2013/14 figures less than a week later from 6 April 2013.
Our previous 'Moving the WPR goal posts' alert highlighted one possible solution - that employers could use postponement to delay their employer duties until after the new figures are introduced.