In short: yes. If your employees meet certain conditions, you have to put them into a workplace pension scheme and contribute to their pensions. If they don’t meet those conditions, you still have to offer them a workplace pension (unless they’re under 16 or over 75).
This applies to employees who are members of your family, and to employees who’ll only be working for you for a short time.
How do I set up a workplace pension scheme?
The good news is that setting up a pension scheme is pretty easy. The process can be completed online and usually your pension scheme is ready to use the same day.
A good place to start is this free pension comparison tool. This will help you find a pension provider whose system integrates well with your payroll software. Choosing a provider that works well with your software is crucial: it will save you time and make the process much easier!
Some pension providers charge a setup fee, but many are free.
Who do I need to put into the pension scheme?
Once your pension scheme is up and running, you should assess your employees to see who to enrol and whether you need to contribute to their pension. Your payroll software may be able to do this, or you can use our flowchart for assessing each employee.
Whenever you employ a new member of staff, you’ll need to assess them from the date they started working for you (although you can choose to postpone their assessment).
After assessing your employees, and enrolling anyone who needs to be enrolled, the next step is to send each of them a letter saying whether or not they’ve been put into the pension scheme and explaining their options. Some payroll systems can generate these letters for you. If yours doesn’t, you can download templates from the Pensions Regulator.
NB Any employee who is between 22 and the state pension age and has a gross salary of over £192 per week or £833 per month must be put into the pension scheme. The employee can opt out after they’ve been enrolled, but the employer has a legal duty to enrol them in the first place – even if the employee doesn’t want them to!
How much do I have to contribute to my employee’s pension?
From 6 April 2018 to 5 April 2019, employers have to pay a minimum of 2% of qualifying earnings into an employee’s pension pot. Employees themselves must contribute a minimum of 3% of their qualifying earnings. (Employees can contribute more than 3% if they want to, but this doesn’t mean that employers have to contribute more than 2%.) From 6 April 2019, the minimum contributions will increase to 5% for employees and 3% for employers.
Do I have to enrol seasonal or temporary workers?
All employees have the right to join a workplace pension scheme, even if they’re only going to work for you for a few days. However, if you have employees who won’t be working for you for long, you can use postponement to delay assessing them for up to three months. All you need to do is write to them (or send them an email) explaining that their assessment is being postponed. Your payroll software may be able to generate a suitable letter. If not, you can download a template from the Pensions Regulator.
You can use postponement to delay assessing any member of staff for up to three months. As above, you just have to write to them explaining that their assessment is being postponed. However, if an employee asks to be put into the pension scheme during their postponement period, you will have to enrol them (even if they’re a seasonal or short-term worker).
Workplace pensions can be tough to get your head around! If you have any questions get in touch.