Workplace pensions

Disclaimer:  Whilst every effort has been made to ensure the accuracy of the information contained in the Pink Book of Legislation, we regret that we cannot be responsible for any errors. This guide is not intended to be a definitive statement of the law in England. If you require precise or detailed information on the legislation mentioned in this guide, or on the legal implications for you in particular, you should consult a professional legal adviser.

Key facts

  • If you have employees, you must implement a Workplace Pension Scheme before your Staging Date, which is related to your PAYE reference number
  • You must notify all employees to explain why they either have or have not been included in your Workplace Pension Scheme
  • Those employees not eligible to be included in a scheme must be allowed the opportunity to join the scheme
  • The minimum contributions that both you and your employees have to contribute to the scheme are determined by law.

 

Background

Under the Pensions Act 2008, every employer in the UK must put certain staff into a pension scheme and contribute towards it. The pension scheme is called a “Workplace Pension” and the process by which you put eligible staff into the scheme is called ‘Automatic Enrolment’.

Do the regulations apply to me?

Yes: if you:

Employ at least one person, either full-time, part-time or on a casual basis provided that:

  • They earn over £10,000 per annum
  • They are aged between 22 and the state pension age

Maybe: if you employ someone outside the criteria above and they ask to join a Workplace Pension Scheme

No: if you have no staff

  • Note: if you have staff who are not eligible, you still have other tasks to carry out in order to meet your legal duties, including writing to these staff to tell them how automatic enrolment applies to them.

Steps to set up a workplace pension scheme

  1. Do you have staff ?

The usual determinant of whether you have staff is whether you decide the work that the person does, tell them how they are to do it, provide the equipment, pay them for the hours that they undertake the work (rather than a fixed price for the work) and the person is entitled to benefits such as holiday pay or sick pay.

  1. Finding your Staging Date

If you have determined that you have staff, then you next need to know the date by which you need to start your workplace pension.

Your staging date is set in law and is related to your PAYE reference number. Enter your PAYE reference number on the Pensions Regulator website to find out when this is. If you don’t pay staff through a PAYE scheme, then your Staging Date is 1 April 2017.

  1. Confirm the contact person

As your Staging Date approaches, you will receive a letter from the Government asking you to confirm the contact person in your business. This person will be legally responsible for the implementation of the workplace pension and will usually be the owner of the business.

This person will be sent letters to keep them up-to-date with the tasks they need to complete and the dates by which these tasks need to be completed.

  1. Choose a pension scheme

Your next task is to choose the pension scheme that you will use to provide your workplace pension. If you have an existing pension scheme, you can use this or you can seek advice from a pension advisor. Alternatively, you can use the National Employment Savings Trust (NEST), which is a pension scheme provider that has been set up by Government and must accept all employers that apply to use it for automatic enrolment. 

  1. Determine who to include in the pension scheme

Just before your Staging Date, you are required to determine who to include in the pension scheme and to provide information on these employees to your pension provider.

You must include any of your staff who are aged between 22 and the state pension age and earn over £10,000 per year (or £833 per month or £192 per week) that is not already enrolled in a company pension scheme. Employees who fall outside this requirement only need to be included if they specifically ask to be included.

  1. Write to inform your staff

Within six weeks of your workplace pension starting, you must write to all your staff individually and tell them how the workplace pension applies to them. That means writing to those who have been enrolled to tell them that they are in the pension scheme and to those that have not been enrolled to explain why, as well as let them know that they can be enrolled if they request to be included.

  1. Declaration of compliance

Finally, within five months of setting-up your Workplace Pension Scheme, you must complete an online declaration to confirm that you have met your legal duties.

  • Note: Even if you do not have any employees, you still need to complete a Declaration of Compliance to say your business has complied with the new legislation. This can be completed online at www.autoenrol.tpr.gov.uk.

Contributions

While there is no maximum level for contributions to a Workplace Pension Scheme, the Government has introduced minimum contribution levels to be phased-in until April 2019. The minimum contributions that both you and your qualifying employees will have to make to the Workplace Pension Scheme are:

Date Minimum employee contribution Minimum employer contribution
Before 05/04/2018 1% 1%
06/-04/2018-05/04/2019 3% 2%
06/04/2019 onwards 5% 3%

 

Further guidance