01633 246246

Workplace Pensions

In the past, many employees may have missed out on valuable pension benefits, either because they didn’t join their company’s pension scheme, or their employer didn’t offer them a pension.

In the past, many employees may have missed out on valuable pension benefits, either because they didn’t join their company’s pension scheme, or their employer didn’t offer them a pension.

This was changed by the introduction of auto enrolment which makes it compulsory for employers to enrol eligible employees into a pension scheme and to pay a minimum contribution into it.

Employees – How much do I and my employer have to pay?

The government has set minimum levels of contributions that must be paid to the workplace pension scheme by you and/or your employer.

Your employer must pay some of the minimum total contribution. If your employer doesn’t pay all the minimum total contribution, you will need to make up some of the difference. Your employer will tell you how much you need to pay.

Through tax relief on your contributions, the government will effectively also be paying into your pension pot. Even if you don’t pay Income Tax, you’ll still get tax relief if your pension scheme uses tax relief at source.

The minimum total contribution to the scheme is usually based on your ‘qualifying earnings’. These are your earnings from employment, before Income Tax and National Insurance contributions are deducted, that fall between a lower and upper earnings limit that are set by the government.

If your employer decides to pay only the minimum amount, the minimum total contribution, as a percentage of your qualifying earnings is:

  • Your employer pays: 3.0% of your qualifying earnings
  • You pay: 4.0% of your qualifying earnings
  • The government adds tax relief of: 1.0% of your qualifying earnings
  • Total contribution: 8.0% of your qualifying earnings

Employer responsibilities

Under the Pensions Act 2008, if you employ at least one person, you have a legal duty to enrol certain staff into a workplace pension scheme and contribute towards it.

What you need to do will depend on whether you have staff who need to be put into a pension scheme or not. The Pensions Regulator has an online tool to find out what you’ll need to do to meet auto enrolment requirements.

Ongoing duties

Automatic enrolment is a continuous responsibility and each time you pay your staff you need to do the following:

  • Monitor changes in their age and earnings to see if they need to be enrolled into the scheme.
  • Pay the correct amount into the pension scheme.
  • Manage requests to join or leave the scheme.
  • Keep records.

In addition, every three years you must carry out re-enrolment to put back in any staff who have left the scheme.

“Sweetland Associates Ltd have been our advisers since 1999. They have looked after all our financial needs in a professional and timely manner and always gives us first class service and attention. They have recently upgraded our business protection arrangements with a new death in service scheme as well as a comprehensive review of our Company Pension Scheme.”

Jeff Company Director Pyle & Kenfig South Wales

Want to know more?

To find out more call 01633 246246 or email info@sweetlandassociates.co.uk

Sweetland Associates Ltd
Personal & Corporate Independent Financial Advisers
107 Stow Hill
Newport
NP20 4ED
01633 246246 / 07711 036958

info@sweetlandassociates.co.uk

The information contained within this site is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK. Company Registration Number: 4689304
Country of Registration: England & Wales. Trading office address: Cathedral Chambers 107 Stow Hill Newport South Wales NP20 4ED. Registered office address: 107 Stow Hill, Newport, South Wales NP20 4ED
Telephone Number: 01633 246246 Email address: info@sweetlandassociates.co.uk Sweetland Associates Ltd is authorised and regulated by the Financial Conduct Authority and is entered on the FCA register (www.fca.gov.uk) under reference 744333.
Further information about the Financial Ombudsman Service (FOS) is available from their website www.financial-ombudsman.org.uk