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Pension Enrolment Scheme

Pension Enrolment Scheme


As an employer, you have a legal duty to ensure that you provide a workplace pension scheme. An auto-enrolment pension scheme is where employees are automatically enrolled into a workplace pension scheme and contribute to that scheme along with the employer. The pension regulator and HMRC set out rules. 


A pension scheme must be put in place by all employers, even if there is just one single employee.  


The auto-enrolment pension scheme has been designed to help individuals save towards their retirement over and above that offered under a state pension level. 


An eligibility criterion must be reviewed to ensure employees who meet these criteria are enrolled at any point during their employment. Some of these are: 

  • age 22 to state pension age 
  • working in the UK 
  • earning more than £833 per month 


As an employer, when you add an employee to the pension scheme, you must write to them to let them know. As an employer, you can postpone enrolling them for up to 3 months if they are on probation. Although you must write to your employee and let them know when they will be enrolled. Details should include: the date the employee is automatically enrolled, the name of the pension scheme and who runs it, the contribution amounts the employer and employee pay, how the employee can leave the pension scheme if they wish to 



How much are the pension contributions? 

The minimum auto-enrolment pension contribution is 8% which is made up of a minimum contribution of: 

3% by the employer 

5% by the employee 


Employers can opt to pay more, reducing the amount the employee pays. 

Pension contributions are a great way to save for retirement and attract tax relief at the same time for individuals. 



Choosing a Pension Scheme 

It is recommended to do some research and look at different pension schemes before you decide which scheme to sign up to. There are many out there for small businesses, from NEST, NOW Pensions, The People’s Pension, Creative Pension, and Standard Life Workplace Pension these are to name a few. Research the pension schemes and check whether they work with your payroll, the cost, and whether they will accept all your staff. An alternative option is to get help from a Pensions Advisor. If you are unsure who to use, we have our recommended advisors and would be happy to refer you to them. 



Company Pension Contributions 

Pension schemes can also be an excellent method to help your limited company to be tax efficient. As a director, you can pay personal pension contributions through your salary or dividends. Personal contributions benefit from tax relief on every contribution. 


You can also make pension contributions directly from your limited company. There is an annual allowance limit as company pension contributions are business expenses. This is a great advantage as this will reduce your yearly profit and corporation tax and avoid dividend tax. Also, anything you put into your pension scheme from the business won’t be liable to income tax or National Insurance. 


However, care must be taken when looking into company pension schemes to ensure that the correct scheme has been selected and set up correctly. Advice from a registered pension advisor should be sort. 


You can read about pension schemes on the government  

website:  and the Pensions Regulator


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