Workplace pensions – what your employer can and can’t do

    Over the next few years, starting from October 2012, all employers must by law offer a workplace pension scheme. You, your employer and the government will pay into your pension if you’re enrolled into a workplace scheme.

    The biggest employers have already started enrolling workers into their pension scheme.

    Check if the new law applies to you and when you may be enrolled into your employer’s scheme.

    What your employer must do

    Your employer must automatically enrol you into a pension scheme and make contributions to your pension if you:

    • are aged between 22 and State Pension age
    • earn at least £10,000 a year
    • work in the UK

    If your employer doesn’t have to enrol you by law, you can still join their pension scheme if you want to. Your employer can’t refuse.

    However, they don’t have to contribute if you earn these amounts or less:

    • £481 a month
    • £111 a week
    • £444 per 4 weeks

    When you’re enrolled into their pension scheme, your employer must:

    • pay at least the minimum contributions to the pension scheme on time
    • let you leave the pension scheme (called ‘opting out’) if you ask – and refund money you’ve paid if you opt out within 1 month
    • let you rejoin the scheme at least once a year if you’ve opted out
    • enrol you back in once every 3 years if you’ve opted out and you’re still eligible for automatic enrolment

    What your employer can’t do

    Your employer can’t:

    • encourage or force you to opt out of the scheme
    • unfairly dismiss or discriminate against you for staying in a workplace pension scheme
    • imply someone’s more likely to get a job if they choose to opt out of the pension scheme
    • close a workplace pension scheme without automatically enrolling all members into another one

    If you’re concerned about the way your employer is dealing with automatic enrolment or managing your workplace pension, you can contact The Pensions Regulator.

    What your employer must tell you

    When your employer automatically enrols you into their workplace pension scheme, they must write to you. In the letter, they must tell you:

    • the date they’ve added you to the pension scheme
    • the type of pension scheme and who runs it
    • how much they will contribute and how much you’ll have to pay in
    • how you can leave the scheme if you want to

    What employers can do

    Delay the enrolment date

    Your employer can delay the date they must enrol you into a pension scheme by up to 3 months.

    They may be able to delay longer if they’ve chosen a ‘defined benefit’ scheme or a ‘hybrid’ pension scheme (a mixture of defined benefit and defined contribution schemes).

    Your employer must:

    • tell you about the delay in writing
    • let you join in the meantime if you ask to

    Salary sacrifice

    You and your employer may agree to use ‘salary sacrifice’ (sometimes known as a ‘SMART’ scheme).

    If you do this, you give up part of your salary and your employer pays this straight into your pension. In some cases, this will mean you and your employer pay less tax and National Insurance.

    Ask your employer if they use salary sacrifice.