How do I know if I need to provide a pension to my workers?
Who can opt in to your auto-enrolment pension?
You must offer a workplace pension scheme and auto-enrol staff who meet certain criteria. However, some staff who aren’t eligible for auto-enrolment still have a right to opt in to your pension scheme. Who can do this?
Related documents - If you need a template to offer your employee, email us!
Auto-enrolment rules
Every employer, regardless of size, must offer a workplace pension scheme and auto-enrol into it those staff who:
are classified as a worker
are aged between 22 and state pension age
earn at least £10,000 p.a., or £833 p.m. or £192 p.w.
are not already signed up to a workplace pension scheme; and
ordinarily work in the UK.
This is commonly known as “auto-enrolment”.
The contributions
Were an employee is auto-enrolled into a workplace pension, they will usually make contributions of 5% of their total earnings between £6,240 and £50,270 p.a. before tax. Total earnings include: salary or wages; bonuses and commission; overtime; statutory sick pay and statutory maternity, paternity or adoption pay. The employee will also get tax relief on their personal contributions.
The employer must also make a contribution to the same pension worth 3% of the employee’s total earnings, making a total annual contribution of 8%.
Right to opt out
Workers may choose to opt out of auto-enrolment if they don’t want to save into a pension and some do this so they have more money available to them each month.
But who has the right to opt in to your workplace pension scheme if they aren’t eligible to be auto-enrolled?
Right to opt in
A non-eligible worker can choose to opt in to your workplace pension scheme if they are:
aged 16-21, or state pension age to 74, and earning over £10,000 p.a.; or
aged 16-74 and earning over £6,032 up to and including £10,000 p.a.
Workers who have opted out either after being auto-enrolled or choosing to opt in, may also opt in again.
Requests in writing
All requests to opt in must be in writing and signed by the worker who is asking to opt in. If a request has been made electronically, e.g. via email, it must include a statement from the worker that they have personally submitted the opt-in request.
Tip. You must enrol staff who have asked to opt in to the same pension scheme which you are using for auto-enrolment purposes and pay employer contributions, just as you would do for those workers who are eligible for auto-enrolment. Enrolment must usually occur within one month of the request being received.
Tip. You must write to all staff who aren’t eligible for auto-enrolment telling them about their right to opt in to your pension scheme. We’ve created a letter that you can use for this purpose - email us!
A non-eligible worker can choose to opt in to your workplace pension scheme if they are aged 16-21, or state pension age to 74, and earning over £10,000 p.a.; or aged 16-74 and earning over £6,032 up to and including £10,000 per year. Workers who have opted out, either after being auto-enrolled or opting in, may also opt in again.