Employer Pension Obligations

You do not have to set up a pension scheme for your employees.
You might have to provide access to a stakeholder pension scheme run by a third party.

When you must provide access to a stakeholder pension scheme

If you have five or more employees – at least one of which is considered a ‘relevant’ for pension purposes – and do not provide another qualifying scheme.
It must also be possible for them to have their contributions deducted from their pay.

Occupational schemes that are open to all employees within one year of starting work for you.
Personal pension schemes which all employees (18 and over) can join.
In both cases, you must contribute at least 3 per cent of each member’s basic salary.

An employee who has been in continuous employment with you for at least three months.
An employee who is already a member of your existing pension scheme.
An employee who could have joined your existing pension scheme but chose not to.
An employee who is not restricted to joining your existing scheme because of their age.
An employee who has earned more than the National Insurance lower earning limit each week for the last three months (with the exception of one week).
An employee who is not restricted to joining your existing scheme because of HM Revenue & Customs restrictions.

Choose a scheme from the Pension Regulator’s list of registered stakeholder providers and discuss this decision with your employees.
Allow the provider access to employees at work and give their contact details to your employees.
Make pension deductions through the payroll system so employee contributions are deducted from their pay – and keep records of them.
Forward contributions to the provider.