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Understanding Workplace Pensions

Understanding Workplace Pensions

In 2008 a new pensions act was introduced, requiring UK employers to provide their workers with access to a workplace pension scheme. The legislation was rolled out to the largest employers first and by 1st October 2017 it became a legal duty for all new UK employers.

All UK employers must now offer a workplace pension scheme to their employees as soon as they begin working for them.

What is a pensions scheme?

A pension scheme is effectively a type of long-term savings plan, introduced by the government to encourage individuals to set aside money for their retirement.

Who receives a pension scheme?

All employers in the UK must now set up a workplace pension scheme, for their employees to be enrolled into. If an employee is between 22 and state pension age and earning over £10,000 per annum, they will qualify for automatic enrolment and must be enrolled into the pension scheme.

What if they do not meet the criteria for automatic enrolment?

If an employee does not meet the criteria to be automatically enrolled into a pension scheme, they still have the right to opt in, should they wish. To do this the employee should contact their employer, or the persons acting on the employer’s behalf, to request to be enrolled into the scheme.

Does an employee have to contribute into their pension scheme?

If a newly enrolled employee wishes to stop paying into their pension scheme, they should contact their pension provider directly and inform them that they wish to “opt out”. If, however, they have been enrolled for more than 30 days, the employee would instead need to request to “cease contributions”.

As an employer what are my responsibilities?

Whilst an employer’s specific responsibilities may depend on the scheme type, they will have to ensure that the duties laid out by the pension’s regulator are met.

These include:

- Set up a workplace pension for your workers and automatically enrol any eligible employees into the scheme

- Send the required legal communications to your employees

- Calculate the pension contributions and ensure they are accurately reflected on your employee’s payslip

- Submit all legal documentation required by the pension regulator

It is important to remember that whilst it is the employer’s duty to offer a pension scheme, it is the employee’s choice, whether to remain enrolled or to leave the pension scheme. The employer cannot influence the employee’s decision.

At Stafftax we offer an additional end to end pension management service, for our customers.

If you’d like us to take care of your employee’s pension and auto enrolment duties, please contact our subscriptions team on 020 3137 4401.

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