Pensions legislation has evolved at a rapid rate in the last few years. Now, under the Pensions Act 2008, every employer in the UK must put eligible workers into a qualifying workplace pension scheme and contribute towards it. This is called automatic enrolment.

If you employ at least one person, you are classed as an employer and have duties regarding workplace pensions.

If you're a new employer, this duty will commence from the moment your first employee joins your business.

Who is affected by auto-enrolment?

Employees who are working in the UK, earning over £10,000 per year, and aged 22 to state pension age must be automatically enrolled into a workplace pension.

Other staff will still have rights under the automatic enrolment scheme, so you will need to write to them individually to let them know what they are entitled to. Failure to make the correct contributions or issue the relevant communications is viewed as a failure to comply with your employer obligations and can result in fines and penalties from The Pensions Regulator.

How can Abco help you manage your workplace pension schemes?

Though it can be tempting to manage auto enrolment in-house, it makes a great deal of sense to outsource this important task to a company that specialises in setting up and managing workplace pensions. Payroll is the function that's best suited to this.

The team here at Abco works closely with pension providers and independent financial advisors (IFAs) to take away much of the administrative burden and enrol your employees into the correct pensions right away. Every time you pay your staff, we will monitor their ages and earnings to make sure any required changes are managed in line with pension legislation.

Please contact us for more information on how Abco can guide you through the minefield of workplace pension obligations.

FAQs

I'm a small business. Do I still need to set up pensions for my staff?
Yes. When auto enrolment was first introduced back in 2012, only larger companies needed to enrol their employees into a qualified pension scheme - but as of 1st February 2018, this legislation affects all UK businesses, of all sizes.

Can my employees opt out of their pension scheme?
Yes. If, for whatever reason, eligible employees do not want to benefit from your chosen scheme, they can elect to leave within a month of being enrolled. They will need to contact the pension provider for an opt-out notice, which they will need to complete and return to you. Any contributions made in that first month should be returned to the member of staff via their following month's payroll.

Can I encourage my employees to opt-out?
As an employer, you are not allowed to influence your employees' decisions. You cannot be seen to actively encourage your staff to leave their workplace pension; they must choose to do so freely. If you clearly coerce employees to leave the scheme or offer a financial incentive to transfer them out of an occupational scheme, this is likely to be considered an inducement. If the Pensions Regulator determines that an inducement has taken place, you may be issued escalating penalty notices of up to £10,000 per day for non-compliance.

I'm the only person employed by my business. Do I still need to set up a workplace pension?
If you are the owner/manager of a limited company and its sole 'employee', you will be classed as a director, not as a worker. Only organisations that employ workers need to enrol their employees into a workplace pension automatically. More information on this topic can be found on the government's Pensions Regulator website.

However, we strongly urge ALL company directors to set up a directors' pension or a private pension. Directors can pay into their pot as an individual and via their limited company. Get in touch with us directly for more guidance and to be introduced to an IFA who can talk you through your options.