EMPLOYER OBLIGATIONS: This page lists the legal responsibilities and obligations of your employer when providing you with a workplace pension.
It started in October 2012. Law changes mean employers can and cannot do certain things with workplace pensions.
The new pension regulations will continue over the next few years. The biggest change is for all employers ‘having to offer a workplace pension scheme’ by law.
Everyone who qualifies must get enrolled into a workplace scheme. Then, the government, you, and your employer all pay money into the pot.
The new employer obligations for occupational pensions apply to all employers – big and small. In fact, some of the UK’s biggest employers are already enrolling their workforce into their particular pension scheme.
Note: The ‘Pensions Regulator‘ have an online staging date calculator. It allows you to check whether the new workplace pension law applies to you and when you will get enrolled. The calculator is a useful tool when planning for retirement because it works for employees as well as employers.
What Employers Must Do
All employers must use ‘automatic enrolment‘ to enrol all their workers who qualify. So, your employer must enrol you into a pension scheme and make contributions to your pension if:
- You are aged between 22 and the UK State Pension age.
- You earn £10,000 or more per year.
- You work in the United Kingdom.
By law, your employer is not required to enrol you if you do not meet the qualification criteria. Even so, you can still choose to join their occupational pension scheme if you would like to. Thus, your employer cannot refuse your application to join in the scheme.
Note: There is one important point to make about their contributions. Employers do not need to contribute to the pension pot if you earn these amounts (or less):
- £120 per week
- £480 per 4 weeks
- £520 per month
Once you get enrolled into your employer’s company pension scheme, they must then:
- Pay the minimum employers’ contributions into the pension scheme and in a timely manner.
- Allow you to leave the pension scheme (called ‘opting out‘) any time you request it. Your employer must refund any money you paid if you decide to opt out within one (1) month.
- Allow you to rejoin the scheme at least once per year if you opted out.
- Enrol you back into the scheme once every three (3) years if you opted out. This is providing you still qualify for automatic enrolment.
What Employers Cannot Do
By law, when it comes to workplace pensions your employer cannot:
- Force you, or encourage you, to opt out of the company scheme.
- Discriminate against you, or use unfair dismissal, for staying in a workplace pension scheme.
- Make implications that someone would be more likely to get a job by choosing to opt out of the pension scheme.
- Close their workplace pension scheme without ‘automatically enrolling‘ all their staff members into another one.
Note: Contact ‘The Pensions Regulator‘ if you have concerns about the way your employer is dealing with automatic enrolment or workplace pension management.
What Employers Must Tell Workers
Workplace pensions employers’ responsibilities in automatic enrolment means writing to staff members. Your employer must write a letter that informs you:
- The date that company management added you into the pension scheme.
- Which of the different types of pension schemes you got added to and who manages it.
- The amount contributed by your employer and how much you will need to pay in.
- The process for leaving the scheme if you choose to do so.
What Employers Can Choose to Do
Delay the Enrolment Date
Employers can delay the date of enrollment. As a rule, the longest they can delay enrolling you into a workplace pension scheme is three (3) months.
In some cases, they may be able to delay the date even longer. It might happen if they chose a ‘defined benefit‘ scheme or a ‘hybrid’ pension scheme. A hybrid pension scheme is a mixture of defined benefit and defined contribution.
Even so, your employer must inform you in writing about the delay and allow you to join in the meantime if you want to.
Salary Sacrifice: SMART Scheme
In you both agree, you and your employer can choose to use ‘salary sacrifice’ (also known as a ‘SMART‘ scheme).
Salary sacrifice means you give up part of your salary. Your employer would pay it straight into your pension fund. Often, it means you and your employer pay less tax and National Insurance.