Setting up a workplace pension for the first time

As your duties focus on your employees it’s important to:

• Make sure your employees' records are up to date, for example, salaries, dates of birth and National Insurance numbers. You should also ensure you have their correct contact details, for example, postal address, personal and workplace email address, as you'll need to communicate with them about their pension while they're employed by you.
• Make sure you consider how you pay your employees, how often you pay them and how pay is calculated as these can impact the choices you make when you set up your scheme.
• Consider how you onboard new employees, for example what’s included in their first pay and the use of probationary periods. This can include if you plan to use contractual enrolment. These can impact the ongoing administration of your scheme for years to come so it’s worthwhile setting out how this works now.  

As your organisation will be responsible for your scheme, you’ll need to:

• Decide who in your organisation will take on the day to day running of your scheme, this could include maintaining making contributions, working with your pension provider, helping staff and dealing with opt out and opt in requests.
• Make sure you’ve considered how your organisation works, for example who has access to employee data and who’s responsible for dealing with finances. You may also need to know how to get support from your payroll software provider.
• Make sure you’ve got contingencies in place. TPR understands that things can go wrong which stop you meeting your duties however you should take steps to ensure that should something unexpected happen you can still meet your duties. For example, having more than one person responsible for the day-to-day administration of your pension.  

To make sure you stay on track of your duties your payroll software will need to:

• Help you fulfil the auto enrolment duties set out by The Pensions Regulator including assessing your employees, production of statutory communications and correct calculation of contributions within the regulatory timescales.
• If postponement is being used, it will need to monitor and record when postponement starts and ends for each employee to make sure that contributions are processed once they become eligible.
• Your software also needs to be able to handle changes to payroll when employees opt in and opt out of the scheme. This could mean starting, stopping or refunding employee contributions during any given pay period.

We know that running your pension scheme isn’t your only job so we recommend that you get help making the choices that are right for your scheme and your organisation.

Financial advisers can discuss the options you have when setting up your scheme including selecting your contribution rates, deciding on your scheme default investment and helping choose a pension provider.

Your payroll software provider can give you support and information if you need to make modifications to the software you use to help you meet your duties.

If you employ at least one eligible worker, you must set up a workplace pension under auto enrolment rules. Your duties start on the day you employ your first eligible employee. From that date, you have six weeks to assess your workforce and set up the scheme.

You can delay assessment for up to three months using postponement, but you must notify employees within six weeks. Once the scheme is in place, you’ll need to submit a declaration of compliance to The Pensions Regulator within five months of your duties start date.

If you are the only person in your company and you do not employ anyone else, auto enrolment duties generally do not apply. However, if you employ yourself under a contract of employment and receive a salary, you may still have duties depending on your age and earnings.

The Pensions Regulator provides guidance on this scenario, so it’s best to confirm your status directly with them.

You’ll need accurate details about your business and employees, including names, dates of birth, salaries, and National Insurance numbers. This information is required for assessing eligibility and completing your declaration of compliance.

If you choose contractual enrolment (offering a pension as part of employment contracts), you must inform your pension provider and ensure employee consent for deductions.

Employers must keep records of employee assessments, opt-in and opt-out notices, contribution details, and communications sent to employees. These records should be retained for at least six years, while opt-out notices must be kept for four years.

You’ll also need to complete a declaration of compliance and re-declaration every three years to confirm you’re meeting your duties.

Failing to meet your duties can lead to enforcement action by The Pensions Regulator, including fines. If you miss deadlines, you may need to make backdated contributions for employees and cover any costs associated with late enrolment.

The regulator expects employers to comply promptly, so it’s important to act within the required timeframes.