Assess your workforce
Workers who need to be automatically enrolled into a pension scheme are known as ‘eligible jobholders’. An eligible jobholder is:
- Aged between 22 and state pension age
- Working or ordinarily working in the UK
- Earning above £10,000*
You will need to assess who in your workforce is an eligible jobholder. You must automatically enrol eligible jobholders into a qualifying pension scheme and you will need to make contributions towards it. Workers who are not eligible jobholders still have a right to opt in to a pension scheme or a right to join one.
* The earnings trigger is expected to increase each tax year.
Review your current pension arrangements
If you have an existing pension scheme, you will need to check if it meets the criteria to qualify as an automatic enrolment scheme. If it does, you may wish to consider enrolling all eligible jobholders into it. If your scheme does not currently qualify, you may be able to change the scheme rules or amend the terms of the policy to make it an automatic enrolment scheme, which also has to meet certain minimum qualifying criteria.
If you do not have a pension scheme that is suitable for automatic enrolment you will need to find one. If you have a defined contribution (DC) scheme, you can use this online tool to help you determine whether your existing DC scheme meets the minimum criteria for an automatic enrolment scheme as set out in legislation.
Choosing a qualifying pension scheme
If you need to select a qualifying pension scheme, you can choose from a number of pension providers including the National Employment Savings Trust (NEST), which has a public service obligation to accept all employers that apply to join it.
To be a qualifying scheme, minimum contributions must be made or it must provide a minimum rate at which benefits will build up. A scheme suitable for automatic enrolment must also not:
- Impose barriers to joining the scheme, such as probationary periods or age limits for members
- Require staff to make an active choice to join or take other action prior to joining
- Require the worker to provide extra information to stay in the scheme
Choosing a scheme with good outcomes
It is important to make sure the pension scheme you choose is able to deliver good outcomes for your workers’ retirement savings. An independent financial advisor can offer advice on pension schemes that are right for your company.
Finding out how much it will cost
The minimum amount that an employer must contribute is being phased in, starting at 1% and rising to 3% of the worker's qualifying earnings- for more information visit TPR's website here contributions and funding.
You should bear in mind that there may be other costs involved depending on your chosen pension provider and the scheme you choose.
TPR has an employer contribution calculator tool on its website where you can input detailed information about employee earnings such as maternity pay and bonuses, however it does not provide information about the minimum contribution required during the 'phasing-in' period. We recommend that you also refer to the contributions calculator available on the Money Service website.
Communicate the changes to all your workers
Employers must inform all their workers in writing about the pension changes and how they are personally affected. This includes all your workers (except those aged under 16, or 75 or over), which can include fixed-term contract workers.
You can download letter templates for writing to your workers. Many of the templates tailor information to help workers understand what the changes specifically mean for them. This, in turn, could minimise their questions to you.
The duty falls on the employer to provide the right information to the right individual, at the right time.
> Letter Templates