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As an employer, it is a legal requirement to have a workplace pension scheme for your eligible employees. Your pension scheme should be in place from the moment you first have an employee working for your business. This is referred to as your ‘duties start date’. Additionally, once a workplace pension scheme is up and running, you have legal duties to manage it. This includes auto-enrolling any eligible employees you hire onto your qualifying workplace scheme. Therefore, this article will explain what you, as an employer, need to know about managing workplace pension schemes in England.
What is a Workplace Pension Scheme?
A workplace pension scheme enables your business to contribute towards your staff’s pension. Staff who are eligible will automatically enrol on your scheme.
You may find that staff become eligible after joining your business rather than when you initially employed them due to a change in age or salary. In this instance, you must auto-enrol them in the scheme.
However, if your employee meets the above criteria but has proved to you that they have lifetime allowance protection, you are not obliged to enrol them on your workplace pension scheme.
Managing Your Workplace Pension Scheme
As an employer, you are required to manage your workplace pension scheme. There are many facets to managing your pension scheme, and we explain the key ones in this section.
1. Contributing Towards the Pension Scheme
The central part of managing your workplace pension scheme is contributing to it. Your staff must make contributions, but so do you as an employer. You should note that you should make your contributions on time and with accuracy.
2. Update Changes for Re-Enrolment and Re-Declaration
You may find that your employees become eligible for the pension at a later stage of their employment. This is because there has been a change in their age or their salary.
Additionally, every three years from the date your first employee started working for you, you must re-enrol staff members back onto your pension scheme where either your employee:
- remains in your pension scheme but is paying less than the minimum contribution threshold;
- has left your pension scheme over 12 months before your re-enrolment date; or
- has left your pension scheme less than 12 months before your enrolment date, and you voluntarily wish to re-enrol them rather than wait for your next re-enrolment date if they remain eligible.
3. Respond to Requests to Leave or Join the Scheme
All your staff have the right to request to join or leave your workplace pension scheme. Therefore, when you receive such requests, you must respond immediately.
When an employee requests to join your pensions scheme, you should:
- check their eligibility; and
- where they are eligible, enrol them within one month of their initial request.
Alternatively, if an employee already in your pension scheme asks to leave, you should take action on their request within one month. You should note that all staff have an ‘opt-out window’ when joining your pension scheme, which means they leave within a month and get a refund for their contributions.
4. Workplace Pension Scheme Record Keeping
To manage your workplace pension scheme, you must keep accurate records. These records are evidence of how you have conducted your pension schemes regarding your legal duties. You must generally keep records of:
- names and addresses of your employees enrolled on your pension scheme;
- details of dates contributions have been paid in;
- joining and leaving requests; and
- your unique pension scheme number, or your reference or registry number.
5. Reporting Duties
When managing your pension scheme, you must report certain information to the Pensions Regulator. You can do this quickly through their service called ‘Exchange’.
The information which you need to report includes:
- registering your pension schemes;
- scheme return information;
- any legal breaches;
- a notifiable event if you run a defined benefit scheme;
- paying the levy; and
- if you change or wind up your pension scheme.
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Key Takeaways
As an employer, you have a legal obligation to have a workplace pension scheme once you employ staff. You must also legally enrol staff into the scheme and make contributions. As part of running a workplace pension scheme, you are required to manage it. For example, you are required to keep records of your workplace pension schemes, such as the emails, names and addresses of those within it. You are also required every three years to carry out re-enrolment and re-declarations.
If you need help understanding how to manage your workplace pension scheme in England, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. So call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
A workplace pension scheme allows your business to contribute toward your eligible employee’s future pensions.
As an employer, you need to manage your workplace pension scheme. Managing a pension scheme includes managing requests to leave and join it, and checking if staff have become eligible for the scheme as their employment progresses.
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