Workplace pensions (Employer Duties)

A Workplace Pension is a pension arranged by the employer, for their employees.

Employers are obliged to assess their workforce every pay cycle and employees will fall into three categories:

• Eligible Employees
• Non-Eligible Employees
• Entitled Employees

It a legal requirement for employers to provide a workplace pension scheme for eligible staff. This requirement begins as soon as your first member of staff starts working for you (known as your duties start date).

You must enrol and make an employer’s contribution for all staff who:

• Are aged between 22 and State Pension Age
• Earn at least £10,000 a year.
• Normally work in the UK (this includes people who are based in the UK but travel abroad for work)

This is called Automatic Enrolment.

In most instances, both you and the employee pay a portion of the employee’s salary into their pension, helping them save for later life.

In 2023 the percentages set by government must meet the minimum of 8% where 3% is employer’s contribution (minimum).

If staff become eligible because of a change in their age or earnings, you must put them into your pension scheme and write to them within 6 weeks of the day they meet the criteria.

The workplace pension scheme that you set up must abide by certain rules.

Pensions Contributions

As an employer you must pay from your own business costs at least 3% of your employees ‘qualifying earnings’ into their workplace pension scheme (Eligible and Non-Eligible Employees). You’ll need to check the pension scheme you’re using to find out what counts as qualifying earnings.

You must deduct contributions from your employees pay each pay period. You’ll need to pay these into your pension scheme by the 22^nd day of the next month. You must pay your contributions for each employee by the date you’ve agreed with your provider every time you run the payroll, and any missed payments must be backdated.

Declaration of Compliance

You must declare your compliance within 5 months of your duties start date and any subsequent re-enrolments with The Pension Regulator. The Declaration of Compliance will set out how you have met your employer duties.

Joining and leaving the scheme

All staff can request to ‘opt-in’ (if a non-eligible employee) or ‘join’ (if entitled employee) the pension scheme if they want to. You must put them into a scheme within one month of receiving their request. Staff can also leave the pension scheme whenever they want. You must take them out of the scheme within one month of getting their request. If staff ask to leave your pension scheme within 1 month of joining/opt-in (known as the ‘opt-out’ window), you will have to refund their contributions. If they ask to leave after the opt-out window, their contributions will be kept in their pension until they retire.

Tri-annual Re-enrolment and Re-declaration

Approx. every 3 years from your staging date (dates can slide either side of staging date) you must re-enrol staff into your pension scheme if they:

• Left your pension scheme more than 12 months before your re-enrolment date
• Are still in your pension scheme but may pay below the minimum contribution level because their employer is covering all or part contributions.

You must write to eligible staff within 6 weeks after your re-enrolment date to tell them you have put them back into your pension scheme or re-set their contributions back to default percentages as set by the government.

Cox & Co. are experts in Automatic Enrolment Pension Management.  We provide fully managed pension services to businesses who are looking to outsource the role of pension manager.

For further information regarding Automatic Enrolment and Workplace Pensions visit The Pension Regulator