Employer’s Guide To Understanding the UK Pension System

United Kingdom Workplace Pension Guide 

Workplace pensions are set up by employers to help individuals save for retirement and are often mandated by the government. The employer normally has to make employees part of the pension scheme and pays into it.

Employers must enroll and make an employer’s contribution for all staff who: 

  • are aged between 22 and the State Pension age
  • earn at least £10,000 a year
  • normally work in the UK (this includes people who are based in the UK but travel abroad for work)

If staff become eligible because of a change in their age or earnings, employers must put them into their pension scheme and write to them within 6 weeks of the day they meet the criteria.

Employers must set up a workplace pension scheme for eligible staff if they do not already offer one.

How much must Employers pay

Employers must pay at least 3% of their employee’s ‘qualifying earnings’ into their staff’s pension scheme.

Under most schemes, it’s the employee’s total earnings between £6,240 and £50,270 a year before tax. Total earnings include:

  • salary or wages
  • bonuses and commission
  • overtime
  • statutory sick pay
  • statutory maternity, paternity or adoption pay
  • Paying contributions
  • Employers must deduct contributions from their staff’s pay into the staff pension scheme by the 22nd day (19th by cheque) of the next month.

It is crucial that contributions are paid by the stipulated date and that missed payments be backdated. 

As an employer, there are many rules and regulations that need to be complied with within the employment law. This means a considerable amount of administrative roles. 


Here is a checklist of what employers need to do when it comes to managing the workplace pension scheme.


  • check if and when staff should be re-enrolled
  • manage requests to join and leave pension scheme
  • keep records of meeting legal duties as an employer
  • check if existing staff should be added to the pension scheme, for example when they earn a certain amount
  • Re-enrolment and re-declaration


Every 3 years after  first member of staff starts working for the company, they must be re-enrolled into the pension scheme if they:


left the pension scheme more than 12 months before the re-enrolment date

are still in the pension scheme but pay below the minimum contributions level

If staff left the pension scheme 12 months or less before the next re-enrolment date, employers can choose to re-enrol them on that date or wait until the next re-enrolment date in three years, if they’re still eligible.


It is necessary to write to eligible staff within 6 weeks after the re-enrolment date to inform them of the re-enrolment into the pension scheme.


Employers must complete a re-declaration of compliance even if staff were not re-enrolled or risk getting fined. 

All staff can request to join the pension scheme if they want to. Employers should check eligibility and put them into the scheme within 1 month of getting their request.

Staff can leave the pension scheme whenever they want. Employers must take them out of the scheme within one month of getting their request.

If staff ask to leave the pension scheme within 1 month of joining (known as the ‘opt-out window’), employers will have to refund their contributions within 1 month. If they ask to leave after the opt-out window, their contributions will be kept in their pension until they retire.

Employers must keep records of how they’ve met their legal duties for maintaining the pension scheme, including:

  • the names and addresses of staff enrolled
  • when contributions are paid in
  • all requests to join or leave the pension scheme
  • pension scheme reference or registry number (PSR)
  • Records should be kept for 6 years except for requests to leave the pension scheme which must be kept for 4 years.
  •  Ages and earnings of staff for the sake of enrollment when they become eligible.

There seems to be many rules and regulations to be met when it comes to maintaining pensions. This is unsurprising as pensions serve as a safety net for retirement so that an aging population will result in an excessive burden on taxpayers.

However, as with laws and governance, there will be much bureaucracy, red tape and back and forth. An EOR can greatly help with issues of compliance and matters of employment. 

Reach out to us for a personalized and tailored solution for all your global expansion needs. 

Global People is a leading local employment solutions provider for national and international corporations and can advise and escort you in your next destination.

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Global People aims to assist its clients to fully focus on their development and success in their target destinations without having to worry about the regulation and compliance involved in the employment of their local and expat employees.


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