Workplace pensions
Tools & Resources
Key learnings
- Employees have a legal obligation to provide pension schemes to all eligible employees and contribute towards them.
- Eligible staff must be automatically enrolled into a pension scheme on the first day they begin working for you, even if they are the only employee in your business.
- Employers need to contribute a minimum of 3% into a pension scheme, with employees contributing a minimum of 5%.
Since 1 October 2017, employers in the UK have a legal right to automatically enrol staff into a workplace pensions scheme. This guide explains your duty as an employer and who is, and isn’t, eligible for auto-enrolment in the workplace.
On the first day your first member of staff starts working for you, it is your legal obligation as an employer to provide them with a pension.
Under the Pension Act 2008, UK-based employers are responsible for enrolling all eligible staff into a workplace pensions scheme and contributing towards it.
As an employer, you have the duty to:
- Automatically enrol all staff who are eligible for a pension
- Respond to staff who have the right to ask to opt-in, or join a pension
- Communicate to staff
- Manage opt-outs and promptly refund contributions
- Re-enrol staff who are eligible every three years.
- Complete a declaration of compliance with the regulator
- Keep records
- Maintain payments of pension contributions
To be eligible for automatic enrolment, staff must be:
- Aged between 22 up to State Pension Age: see GOV.UK for further guidance
- Classed as a ‘worker’: you can find the classification of a ‘worker’ here.
- Predominantly working in the UK - whether they are full time or part time, permanent or temporary (this could include staff working overseas who are considered ‘ordinarily working’ in the UK)
- Earning over £10,000 per year, or £833 per month, or £192 per week (for compulsory enrolment).
Any employees earning between £512 and £833 per month, or £118 and £192 per week, have the right to opt-in to a pension scheme with regular contributions being paid by the employer.
If an employee earns below £512 per month or £118 per week, they can request to join a pension scheme, but the employer does not have to make contributions to it. You can find more information here.
Staff do not meet the criteria if they are:
- Directors not working under an employment contract
- A director who is working under an employment contract, where they are the only employee in the company (but only for the work they carry out for that company)
- Officeholders who are not considered workers (eg non-executive directors, trustees, elected members) but they are only excluded for the activities they carry out as an office holder
- Self-employed
For guidance on contractors, agency staff, secondees, see the Pension Regulator guide.
How to find a pension scheme
The Pensions Regulator lists providers that have pensions available to small employers looking for a pension for automatic enrolment. Check it out here.
What do you need to contribute?
Employers need to contribute a minimum of 3%, with employees contributing a minimum of 5%.
Some payroll software can be set up for automatic enrolment. It can calculate contributions for you and make the correct deductions from employees’ pay.
If you don't have payroll software, you can check with your pension provider to see if they have additional services to help.
For more guidance and information on workplace pensions, you can contact the following:
1
The Pension Service (GOV.UK)
The Pension Service is part of the Department for Work and Pensions (DWP). It provides helps with State Pension eligibility, claims and payments (pension credit, pension forecast tools etc).
Find out more here.
2
The Pension Advisory Service
The Pension Advisory Service offers general support with enquiries about all pension matters.
Find out more here.
3
Pension Wise
This government website offering free and impartial guidance about your defined contribution pension options.
Find out more here.
4
The Pensions Regulator (TPR)/Automatic Enrolment
TPR is the UK regulator of workplace pension schemes. They make sure that employers put their staff into a pension scheme and pay money into it. They also make sure that workplace pension schemes are run properly so that people can save safely for their later years.
Find out more here.
Next steps...
- Make sure you understand what your obligations are as an employer in relation to pensions – you can use this free Employer duties checker to help.
- If you haven’t already, implement automatic enrolment within your business – here is a great video guide you can use.
- Check to find out if the payroll software you use can be set up to automatically calculate pension contributions.