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Workplace pension schemes

For the last five years employers have had a legal obligation to offer a workplace pension scheme. In light of the changes involving pension auto-enrolment, we have in the last five years routinely advised a number of our clients in respect of their pension obligations, whether under existing occupational or final salary pension schemes or under the new regulatory provisions. In addition, we have provided external training to our clients on these matters and also provide regular support to our existing clients and contacts on any changes in pension laws.

 

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Your obligations as an employer

An employer is required to auto enrol staff into a pension in the following circumstances, if employees are:

  • Are aged between 22 and state pension age
  • Earn at least £10,000 per year
  • Work in the UK

However, as an employer you are also required to enrol an employee if they want to join the workplace scheme. However, employers do not have to contribute if they earn less than:

  • £490 per month
  • £113 per week
  • £452 per 4 weeks

Your obligations as an employer:

  • You must pay at least the minimum contributions to the pension scheme on time
  • Let employees leave the pension scheme (called ‘opting out’) if they ask - and refund money the employee paid if they opt out within one month
  • Let your employees re-join the scheme at least annually if they have opted out
  • Enrol employees back in once every three years if they opted out and they are still eligible for automatic enrolment

As an employer you would be in breach of your obligations if you were to encourage an employee to leave the scheme or provide the implication that another employee would get more favourable treatment as a result of opting out. If a pension scheme needs to be closed, employees must be transferred into a new scheme before closing the current scheme.

We advise employers to communicate clearly with their employees regarding pensions and as a minimum you should convey to the employee:

  • The date you added the employee to the pension scheme
  • Type of pension scheme and organisation responsible for the scheme
  • Amount you will contribute as the employer and the amount the employee will contribute
  • How employees can opt out and exit the scheme

If an employee raises a grievance against you or you are concerned that you have not fulfilled your obligations, we are well versed in understanding the mechanics of different pension schemes and quantifying loss that arises from the loss of any such pension and being able to either mitigate against the risk associated with such loss.

If you require advice or assistance relating to workplace pensions please call our team on 01616 966 229.

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