How to set up a workplace pension
Different employers will have different specific responsibilities, but you can use the Pensions Regulator online tool to check what applies to your business.
There are a number of steps employers should follow to set up an auto-enrolment workplace pension and we list these below.
1.) Learn as much as you can
Auto-enrolment is an important responsibility for employers, so it is critical to learn as much as you can before your first employee walks through the door.
A good place to start is to get in contact with the Pensions Regulator. You will be sent helpful tips and important information by email to help make sure that you are fulfilling your duties within the correct time frame.
2.) Set up a workplace pension
This is a big one. You will need to pick a provider, decide what payroll software you need and make a call on how much you will be contributing to your workers’ pensions.
You will also need to decide how much of the process you want to undertake yourself and how much you want to hand over to your provider or the payroll software you are using. Payroll software can calculate contributions, communicate with employees, keep records and assess your staff. This can all be a great time-saver when it comes to managing auto-enrolment.
As this is such an important part of the process, you may want to start at least two months before your first employee arrives at your business, if possible.
3.) Find out who qualifies
The key factors when it comes to qualifying for auto-enrolment are age and pay. Employees earning £10,000 or more and aged 22-65 will qualify. You can see the relevant details in this table.
| Annual salary | Age 16 - 21 | Age 22 - 66 (State Pension age) | Age 66 (State Pension age) - 74 |
| £6,240 or less | Employee must be enrolled if they ask. No requirement for employer to contribute, but can choose to. | ||
| £6,240.01 - £9,999.99 | Employee must be enrolled if they ask. Employer required to contribute. | ||
| £10,000 and over | Employee must be enrolled if they ask. No requirement for employer to contribute, but can choose to. | Employee must be auto-enrolled and employer must contribute. | Employee must be enrolled if they ask. No requirement for employer to contribute, but can choose to. |
It is possible to put off assessing your workforce for up to three months. This could be because new starters have to pass a probationary period or you want to wait for the beginning of a new pay period. You will need to tell any staff that are impacted if you choose to postpone.
4.) Enrol qualifying staff
Once you have assessed your workforce, you need to enrol the eligible members of staff. Your chosen pension provider will have a process you need to follow in order to set your employees up with the scheme. This can be a simple process, depending on the provider you have chosen.
5.) Tell staff what is happening
Employers are required by law to write to each employee and explain how the auto-enrolment process will affect them. You should also provide details about the workplace pension scheme.
Some payroll software can produce a template letter or automated email to make this part of the process easier. You should send the correspondence within six weeks of your employer responsibilities starting.
6.) Declare your compliance with the Pensions Regulator
Within five months of your auto-enrolment responsibilities kicking in, your business will need to file a 'declaration of compliance' with the Pensions Regulator, confirming that you have completed the required steps. The form can be found on the Pensions Regulator website.
If you do not do this, or if send the form in late, your business could be fined. It is important to make sure all of the information sent is correct, as any mistakes could also lead to a fine.
Official guidance and support
There are a whole host of great tools and information available on the Pensions Regulator website. These can help you keep on top of your responsibilities as an employer and help you avoid the pitfalls that can lead to expensive fines.
The Pensions Regulator online tool should be the first place you visit.
Alternatively, you could choose to speak to a business advisor or accountant and pay for specialist help in setting up auto-enrolment. Specialist pension provider Penfold* is one such company that can provide help and guidance with setting up an auto-enrolment workplace pension.
If a link has an * beside it this means that it is an affiliated link. If you go via the link, Money to the Masses may receive a small fee which helps keep Money to the Masses free to use. The following link can be used if you do not wish to help Money to the Masses or take advantage of any exclusive offers - Penfold
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