What are my duties to my employees with regards to workplace pensions?

The UK Government has introduced new legislation that forces employers and employees to contribute to their own pension provision. The main driver behind these changes is that the population is living longer and there is a ‘time bomb’ ticking in terms of the aging population. Forcing us to make our own retirement provision will ultimately release some of the pressure on the State.

Auto-Enrolment and Your Responsibilities to Operate a Workplace Pension for Your Employees

If you have employees then you do need to consider your obligations to operate a workplace pension scheme.

When Do I Have to Operate Auto-Enrolment?

If you employed your staff before 1st October 2017 the Pensions Regulator normally writes to employers between three and twelve months before their staging date - this is the date when your auto-enrolment duties come in to force. You can find this out by entering your PAYE reference on the Pensions Regulator website: http://www.thepensionsregulator.gov.uk/employers/staging-date.aspx

If you employed staff after 1st October 2017, and based on your employees’ eligibility and earnings, you may need to enrol them from commencement of their employment. The Pensions Regulator website has a Pensions Checker so that you can check the date you are obliged a workplace pension.

What Do I Need to Do?

If you have been advised with regards to your staging date, and you have employees who work under a contract of employment, then you need to assess your workforce for “eligible jobholders”. Your responsibilities are to:

  • Provide a qualifying pension scheme for “workers”
  • Automatically enrol eligible jobholders on the scheme
  • Pay employer contributions into the scheme
  • Tell eligible jobholders they have been automatically enrolled and that they have the right to opt out if they wish
  • Register with the Pension Scheme Regulator, provide details of the qualifying scheme and number of employees

What If I Have No Employees and I Am the Sole Director?

Your company is outside the scope of pension auto-enrolment rules. The Pensions Regulator Guidance says, “ if an individual is a director of a company and the company has no other employees, that individual is not a worker by virtue of any office they hold or contract of employment under which they work.”

Who Are Eligible Jobholders?

This is an employee aged 22 up to the state pension age with earnings over £10,000. This worker must be automatically enrolled and both they and your company must make pension contributions.

Who Are Non-Eligible Jobholders?

This is an employee aged between 16 and 21 or between state pension age and 74 with earnings over £10,000 or aged between 16 and 74 with earnings of £6,032 per annum (2018/19) to £10,000. This individual doesn’t have to be automatically enrolled but has the right to ask to be enrolled and you need to tell them about their rights within six weeks of their staging date. You must contribute to the scheme.

Who Is an Entitled Worker?

This is an employee aged 16-74 with earnings of £6,032 per annum or less for 2018/19. These workers have a right to join a pension scheme - the scheme you choose can be different to the one used for auto-enrolment. You are obliged to provide a pension if they ask, but you have to tell them of their pension rights within six weeks of their staging date. You do not have to contribute to the scheme.

Pensions Advice

Brookson One are not permitted to provide pensions advice, however, we can put  you in contact with Brookson Financial Limited who can provide you with further information,  or alternatively, speak to your own independent financial adviser.

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