Setting up your workplace pension scheme
If you're a UK employer with one or more employees you are required to provide and contribute to a workplace pension scheme for eligible employees. This is called auto-enrolment and it's a legal requirement.
Your duties start on the day you employ your first eligible employee. You then have six weeks to set up your workplace pension scheme, write to your employees and enrol them in your scheme.
You can choose to delay this by up to three months using postponement but this can be no later than:
- three months after the date your employer duties start, or
- three months after an eligible employee's first day of employment, or
- three months after an employee first becomes eligible for automatic enrolment.
Postponement can't be used when cyclically re-enrolling employees into your scheme.
You'll also need to declare you're meeting your auto-enrolment duties to The Pensions Regulator (TPR) within 5 months of your start date. Read more about the declaration of compliance.
One of your key employer duties is checking which employees should be automatically enrolled in your workplace pension scheme. Your duties then depend on whether they're an eligible, non-eligible or entitled employee.
Eligible employees:
- earn over £10,000 a year
- be aged between 22 and their State Pension age (opens in new window)
You must be automatically enrol eligible employees into your scheme and you're required to contribute to their retirement.
Non-eligible employees:
- earn over £10,000 a year
- and are aged between 16 and 21 or between State Pension age (opens in new window) and 74
or
- earn less than £10,000 a year but more than £6,240
- and are aged between 16 and 74
If a non-eligible employee asks to join your scheme, you must enrol them and pay regular employer contributions.
Entitled employees:
- earn less than £6,240
- and are aged between 16 and 74
If an entitled employee asks to join your scheme you must enrol them but you aren't legally required to contribute to their pension.
Your employees can choose to opt out of your workplace pension scheme. They'll get information on how to do this when we contact them about their workplace pension.
The legal minimum contribution to a workplace pension is 8% of an employee's qualifying earnings. As an employer, you're required to contribute at least 3% but you can pay more if you want to. If you only pay the minimum then your employee must contribute the additional 5% to meet the 8% minimum.
Your employees will receive tax relief on their pension contributions, if eligible.
If your scheme is set up on a salary exchange arrangement both you and your employees will benefit from paying less National Insurance contributions (NIC).
Once you have employees enrolled in your scheme you'll need to start paying contributions into their workplace pension no later than the first payday after your duties start date.
This includes your employer contribution and your employee's contribution, which you'll need to calculate and deduct from each of your eligible employees salaries.
You're required to keep formal records on your employees and your workplace pension scheme as the Pensions Regulator may ask to see them. They must be kept for at least six years or, for employees who opt out of your pension scheme, four years. Your records should include the following details:
Employee records - Name, NIC, date of birth, gross qualifying earnings (where applicable), contributions paid, opt-in/opt-out notice and joining notice
Pension scheme records - Scheme name, address and reference number
Your duties start on the day you employ your first eligible employee. You then have six weeks to set up your workplace pension scheme, write to your employees and enrol them in your scheme.
You can choose to delay this by up to three months using postponement but this can be no later than:
- three months after the date your employer duties start, or
- three months after an eligible employee's first day of employment, or
- three months after an employee first becomes eligible for automatic enrolment.
Postponement can't be used when cyclically re-enrolling employees into your scheme.
You'll also need to declare you're meeting your auto-enrolment duties to The Pensions Regulator (TPR) within 5 months of your start date. Read more about the declaration of compliance.
One of your key employer duties is checking which employees should be automatically enrolled in your workplace pension scheme. Your duties then depend on whether they're an eligible, non-eligible or entitled employee.
Eligible employees:
- earn over £10,000 a year
- be aged between 22 and their State Pension age (opens in new window)
You must be automatically enrol eligible employees into your scheme and you're required to contribute to their retirement.
Non-eligible employees:
- earn over £10,000 a year
- and are aged between 16 and 21 or between State Pension age (opens in new window) and 74
or
- earn less than £10,000 a year but more than £6,240
- and are aged between 16 and 74
If a non-eligible employee asks to join your scheme, you must enrol them and pay regular employer contributions.
Entitled employees:
- earn less than £6,240
- and are aged between 16 and 74
If an entitled employee asks to join your scheme you must enrol them but you aren't legally required to contribute to their pension.
Your employees can choose to opt out of your workplace pension scheme. They'll get information on how to do this when we contact them about their workplace pension.
The legal minimum contribution to a workplace pension is 8% of an employee's qualifying earnings. As an employer, you're required to contribute at least 3% but you can pay more if you want to. If you only pay the minimum then your employee must contribute the additional 5% to meet the 8% minimum.
Your employees will receive tax relief on their pension contributions, if eligible.
If your scheme is set up on a salary exchange arrangement both you and your employees will benefit from paying less National Insurance contributions (NIC).
Once you have employees enrolled in your scheme you'll need to start paying contributions into their workplace pension no later than the first payday after your duties start date.
This includes your employer contribution and your employee's contribution, which you'll need to calculate and deduct from each of your eligible employees salaries.
You're required to keep formal records on your employees and your workplace pension scheme as the Pensions Regulator may ask to see them. They must be kept for at least six years or, for employees who opt out of your pension scheme, four years. Your records should include the following details:
Employee records - Name, NIC, date of birth, gross qualifying earnings (where applicable), contributions paid, opt-in/opt-out notice and joining notice
Pension scheme records - Scheme name, address and reference number
Your ongoing duties
Once your scheme's set up you'll need to continue to monitor your employees eligibility regularly and assess the eligibility of new employees. A change in age or salary could mean a non-eligible employee becomes eligible, and vice versa.
You're required to re-enrol employees who aren't in your workplace pension scheme every three years. This is called cyclical re-enrolment.
Your first re-enrolment date is three years after your duties start date, although you have the flexibility to choose a date that falls within the three months before or after this date. Whichever date you choose, re-enrolment must be done within this six month window.
Read more about this in our guide to cyclical re-enrolment (PDF) (opens in new window).
Each time you go through cyclical re-enrolment you'll need to complete a re-declaration of compliance.
You'll receive notifications of upcoming tasks through online service to help you keep on top of your duties.
If you don't complete your duties or you're unable to provide employee or pension scheme records upon request you could face enforcement action such as compliance notices, penalties and fines.
Find out more about what could happen if you don't comply.
You're required to re-enrol employees who aren't in your workplace pension scheme every three years. This is called cyclical re-enrolment.
Your first re-enrolment date is three years after your duties start date, although you have the flexibility to choose a date that falls within the three months before or after this date. Whichever date you choose, re-enrolment must be done within this six month window.
Read more about this in our guide to cyclical re-enrolment (PDF) (opens in new window).
Each time you go through cyclical re-enrolment you'll need to complete a re-declaration of compliance.
You'll receive notifications of upcoming tasks through online service to help you keep on top of your duties.
If you don't complete your duties or you're unable to provide employee or pension scheme records upon request you could face enforcement action such as compliance notices, penalties and fines.
Find out more about what could happen if you don't comply.