How to Prepare Your Business for Workplace Pensions
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How to Prepare Your Business for Workplace Pensions

Since October 2012, it’s been a legal requirement for employers to offer a workplace pension scheme to their eligible staff:

  • Aged 22 to State Pension age (66 for men and women).
  • Earn at least £10,000 a year.
  • Work in the UK.

The Money Advice Service have created a workplace pension contribution calculator so people can calculate how much both they and their employer should be paying into their pension scheme. It also gives an indication of how these contributions might increase over time.

It’s important for employers to be familiar with these rules and put them into practice. If you recently became an employer (between 2 April – 30 September 2017), you can use a Pensions Regulator tool to find out when you need to start enrolling your staff.

What Are The Minimum Contributions?

Until 5 April 2018, employers and staff need to contribute at least 1% each, making the total contribution 2%. From 6 April 2018 to 5 April 2019, this will rise to 2% for employers and 3% for staff, totalling 5%. And from 6 April 2019 onward, this will be 3% for employers and 5% for staff, totalling 8%.

Employers and staff can agree to pay more than this if they choose. Some employers may choose to cover the total minimum contribution, which means staff won’t have to contribute anything.

What Do Employers Need to Do?

Eligible staff will be automatically enrolled, but those who don’t meet the criteria can still choose to join the pension scheme if they wish, and they can’t be refused.

Employers must:

  • Pay the minimum contributions into the pension scheme on time.
  • Allow staff to opt out if they choose, and refund the money you’ve paid within 1 month.
  • Let staff rejoin the scheme once a year if they’ve previously opted out.
  • Re-enroll eligible staff once every 3 years if they’ve previously opted out.

Information employers must disclose to their staff:

  • The date they were added to the pension scheme.
  • The type of pension it is and who runs it.
  • How much the employer and staff member will need to contribute.
  • How the staff member can leave the scheme if they choose to.

For more information, employers can use an easy online tool from the government’s Pensions Regulator service to find out what their automatic enrolment responsibilities are.

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