Every employer in the UK must put certain staff into a pension scheme and contribute towards it. This is called ‘automatic enrolment’. If you employ at least one person, you have a legal duty to offer a pension scheme that can be used for automatic enrolment.
The date your first member of staff starts working for you. Your legal duties begin on this date. If you put your staff into your pension scheme on this date, you need to start paying contributions into it from the next payday after
There are a number of solutions available in the UK to accommodate companies of any size. There are a number of factors to consider when choosing a pension provider including charges, performance and how the scheme integrates with your payroll software.
You can’t move your duties start date back but you can delay the automatic enrolment of your staff by choosing a postponement option. Postponement gives you up to three months from your duties start date to work out who
you need to put into a pension scheme and enrol them. You can also postpone the enrolment of new employees. You will have to let your employees know you are postponing their enrolment by writing to them within six weeks of their employment start date. Employees can still ask to join the pension during this period.
Employees who must be put into a pension scheme you pay into are:
If any of your staff fall outside of the above age and earning criteria then you only need to put them into a pension scheme if they ask.
There are a handful of employees for whom it is optional to put into the pension scheme. Among the most common are:
You may need to check with your employees whether any of this applies to them. Find out more at http://www.thepensionsregulator.gov.uk/en/employers/
You have to contribute the ‘Employer minimum contribution’ shown below. Then the total contribution is reached by adding the employee’s contribution (deducted from their earnings) and tax relief from the
Government. However, you can choose to pay more if you want to.
|Dates||Employer minimum contribution||Employee minimum contribution||Tax relief on employee contribution||Total minimum contribution|
|6 April 2019 onwards||3%||4%||1%||8%|
Minimum contribution levels are based on the employee’s qualifying earnings. For the 2022/23 tax year, this will be the employee’s gross earnings that fall between £6,240 and £50,270 a year. This will include pay elements such as salary, commission, bonuses, overtime and statutory sick/parental pay. (£520 and £4189 a month or £120 and £967 a week). This means that qualifying earnings can’t be more than £44,030.
It is your legal duty to write to all your staff individually to explain how automatic enrolment applies to them. You must do this within six weeks after your duties start date.
Workers who have been automatically enrolled have the right to opt out of the pension scheme. If an employee wishes to opt out, they must notify the employer via a document called an ‘opt-out notice’ (this is only usually available from the pension scheme provider). When employers receive a valid opt out notice they are required to refund any contributions deducted from the worker’s pay. The pension scheme provider is also obliged to reimburse the employer for any contributions they have made.
You’re legally required to give information to The Pensions Regulator about how you’ve met your automatic enrolment duties. If you don’t provide a declaration of compliance within five months of your duties' start date, you could be fined. You need to declare your compliance on The Pensions Regulator’s website at www.autoenrol.tpr.gov.uk
This is a legal duty and you must do this by your deadline even if you don’t have any staff to put into a pension scheme. If you don’t do this, you may face enforcement action including fines.
The Pensions Regulator will initially just tell you to put things right. Any further failure may lead to the Government fining you a lot of money. And ultimately you could face criminal prosecution and even imprisonment. Find out more at http://www.thepensionsregulator.gov.uk/en/employers/what-happens-if-i-dont-comply
Once you have completed your declaration of compliance you still have ongoing duties towards your staff. These include
You must keep records of how you’ve met your legal duties, including:
You must keep these records for six years except for requests to leave the pension scheme which must be kept for four years.
Every three years after your duties' start date you’ll need to assess staff not in your pension scheme, this includes certain staff that were previously enrolled but have left your pension scheme. If they meet the criteria to be put back into your pension scheme, then you must do so. This is known as re-enrolment.
For more information on these tasks go to: www.thepensionsregulator.gov.uk/en/employers/re-enrolment/i-am-or-will-be-an-employer-with-staff-to-put-back-into-my-scheme