Home 5 Pension 5 Workplace pension responsibilities
graph showing amounts for a workplace pension over an amount of time

Workplace pension responsibilities

21 March 2024

Automatic enrolment for workplace pensions has helped many employees make provision for their retirement, with employers and government also contributing to make a larger pension pot.

Workplace pensions, through automatic enrolment, have become a significant aid for many employees planning for their retirement. Both employers and the government contribute to these pensions, resulting in a larger pension pot for the employees.

The law mandates that employers must enrol workers automatically into a workplace pension if they are aged between 22 and State Pension Age and earn more than the minimum earning threshold. The current minimum threshold stands at £10,000 and will remain unchanged in 2024-25. Additionally, the employee must be working in the UK and not already be a member of a qualifying work pension scheme. However, employees have the option to opt-out of joining the pension scheme if they so wish.

The rules also stipulate that employers must offer their workers access to a workplace pension when a change in their age or earnings makes them eligible. Employers must do this within six weeks from the day the employees meet the eligibility criteria.

Under the automatic enrolment rules, both the employer and the government contribute to the pension scheme. There are minimum contributions that both employers and employees must make.

Both the employer and the employee have a responsibility to contribute to the pension scheme. The minimum contribution from the employer is 3%, and from the employee, it’s 4%. This means that the total contributions will be a minimum of 8%: 3% from the employer, 4% from the employee, and an additional 1% as tax relief.

These contributions are based on the qualifying earnings brackets mentioned above. This means that for many employees, the 8% contribution rate will not be based on their full salary but on their earnings within the qualifying brackets. It’s essential for employees to understand these details to plan their retirement effectively.

Source: Pensions Regulator Tue, 19 Mar 2024 00:00:00 +0100

You may also like these

Here are some more articles that might interest you

Expert Advice

If you’d like more information on anything you’ve read, we’re here and happy to help