With the introduction of automatic enrolment, increasing longevity, and employees focusing on the full benefit package offered by an employer, rather than just salary, an employer’s pension offering is under the spotlight. However, despite the increased relevance, the difference between types of pension scheme is not always clear. So, what are the key differences between a workplace trust-based pension scheme (“Trust Scheme“) and a workplace contract-based pension scheme (“Contract Scheme“)?
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The qualifying earnings bands for the purposes of automatic enrolment are due to increase on 6 April 2019. For the tax year 2019/2020, the lower qualifying earnings threshold will be £6,136 (instead of £6,032) and the upper qualifying earnings threshold will be £50,000 (instead of £46,350). The old faithful earnings trigger will continue to remain stable at £10,000.

Why is this important?

Since October 2012, employers have had to make arrangements for certain workers in the UK to be automatically enrolled into a pension scheme that satisfies certain conditions (a qualifying scheme). Very broadly, workers fall into one of three categories (summarised below).


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