Guide

Know your legal obligations on pensions

Automatic enrolment into a workplace pension

All employers must provide workers with a qualifying workplace pension. This is called automatic enrolment.

The Pensions Regulator has produced employer guidance on automatic enrolment with help specifically aimed at small and micro employers. If you already have a workplace pension scheme, check with the Pensions Regulator if you can use it for automatic enrolment.

Who will be automatically enrolled?

You must enrol into the scheme all workers who:

  • are aged between 22 and the State Pension age
  • earn at least £10,000 a year
  • work in the UK

You must make an employer’s contribution to the pension scheme for those workers.

What about workers who don’t have to be automatically enrolled?

Any worker who falls outside the eligible age band – aged 16 to 21, for example, or state pension age to 75 – may opt in to workplace pension saving with a minimum contribution from you.

However, you don’t have to contribute to the pension scheme if the worker earns these amounts or less:

  • £6,136 yearly
  • £512 monthly
  • £472 four-weekly
  • £118 weekly

When workers are enrolled into your pension scheme, you must:

  • pay at least the minimum contributions to the pension scheme on time
  • let workers leave the pension scheme (called ‘opting out’) if they ask - and refund money that they have paid if they opt out within 1 month
  • let workers re-join the scheme at least once a year if they’ve opted out
  • enrol workers back into the scheme once every three years if they’ve opted out and are still eligible for automatic enrolment

You can’t:

  • encourage or force workers to opt out of the scheme
  • unfairly dismiss or discriminate against workers for staying in a workplace pension scheme
  • imply someone’s more likely to get a job if they choose to opt out of the pension scheme
  • close a workplace pension scheme without automatically enrolling all members into another one

Pensions for seasonal and temporary workers

Like other employees, when recruiting seasonal staff or temporary workers, you must assess them to see if they qualify for automatic enrolment into a workplace pension. Assessing these types of employees can take more time because of varying hours and earnings.

Employers who know their staff will be working for them for less than three months can use postponement. This postpones the legal duty to assess staff for three months. During this postponement period, employers will not need to put staff into a pension unless they ask to be put into one. See the Pensions Regulator's guidance on employing seasonal or temporary staff.

What you must tell your workers

When you automatically enrol workers into a workplace pension scheme, you must write to them. In the letter, you must tell them:

  • the date they’ve been added to the pension scheme
  • the type of pension scheme and who runs it
  • how much you will contribute and how much the worker will have to pay in
  • how workers can leave the scheme if they want to

How much will you have to contribute?

The level of pension contributions will be phased in over time to help employers and individuals adjust. Where a worker is automatically enrolled in a defined contribution (DC) scheme or NEST (the National Employment Savings Trust), there will be a minimum contribution of 8 per cent of qualifying earnings, of which the employer must pay a minimum of 3 per cent. If the employer chooses to pay the minimum 3 per cent, the worker will pay 4 per cent, with a further 1 per cent paid as tax relief by the government. Qualifying earnings are earnings between £6,136 and £50,000.