As an employer, you must offer a workplace pension scheme by law. Your employee, you (the business owner), and the government then pay into your pension.
When you employ staff, there are a number of steps that you must follow. You must first enrol your employee into a pension scheme and make contributions if they are eligible or automatic enrolment.
How do I know if I am eligible for automatic enrolment for my pension?
Automatic enrolment for your pension is decided by a number of factors. You must automatically enrol your staff member if the following applies:
- They are classed as a ‘worker’ e.g they have a contact or their reward is money
- They are aged between 22 and state pension age
- They earn at least £10,000 a year
- They usually work in the UK
When do I not have to automatically enrol my employees?
There are exceptions to the rule when it comes to not enrolling your employee. This could be when:
- Your employee has given you notice that they are leaving or you have given them notice
- They have evidence of their lifetime allowance protection
- Your employee is in a limited liability partnership
- You are a director without an employment contract and employ at least one other person in your country
- Your employee is from an EU member state and in an EU cross border pension scheme
- Your employee gets a one off payment from a workplace pension scheme that is closed and then they leave and re join the same place of work within twelve months
What must I do to enrol my employee under a pension scheme?
If you do not enrol your employee to your company pension scheme by law, they can still opt to join the pension scheme and you cannot refuse. As an employee, you must:
- Pay at least the minimum contributions to the pension scheme on time (this is usually by the 22ndof each month)
- Let your employee leave the pension scheme
- Let your employee rejoin the pension scheme if they wish
- Enroll you employee back in at least every three years if they have opted out and are still eligible for automatic enrollment
What can you not do as an employer when it comes to your employees pension
When it comes to your employee’s pension, you cannot persuade any member of staff to opt out of their pension scheme, unfairly dismiss or discriminate employees for staying in a pension scheme, imply someone is more likely to be offered a job for not opting into a pension scheme or, close a workplace pension without automatically enrolling all members into another scheme.
As an employer, you must inform your staff of the following in writing:
- The date you have added them the pension scheme
- They type of pension scheme and who runs it
- How much you will contribute and how much they will contribute
- How they can leave the scheme if they wish
Important information for when enrolling your employee to a pension scheme
When enroling your staff members into their pension, you can delay their employment date by up to three months. You can do this by informing your employee of the delay in writing. You can also pay the first three months of payments as a lump sum on the 22nd of the fourth month.
If you have any questions about how to enrol your staff in the pension scheme, please feel free to get in touch with the Cooper Accounting team, we would be more than happy to help.