Workplace pension spot checks are back. Here’s a reminder of the rules

The removal of Covid restrictions earlier this year marked a return to in-person inspections by The Pensions Regulator (TPR).

In May, Joe Turner, TPR’s Head of Compliance and Enforcement said: “Despite the challenges of the past two years, the majority of employers have continued to meet their responsibilities, including paying contributions in full on time and recognising that automatic enrolment is business as usual.

“But where we are aware that an employer is failing to do the right thing, we will take action to protect savers, including on-site inspections. This means we could be knocking on an employer’s door in any part of the UK.”

Spot checks are targeted at employers suspected of failing to meet their workplace pension duties.

In addition to spot check inspections, TPR also detects non-compliance using Real Time Information (RTI) data shared by HMRC, alerts from pension schemes, and whistleblowing reports from individuals.

To help make sure your workplace pension doesn’t fall foul of non-compliance, read on for a reminder of the workplace pension rules.

Every workplace must now offer a pension scheme to their employees

Under the Pensions Act 2008, workplace pensions became “opt-out” rather than “opt-in”. This means that most employees are automatically enrolled into a pension provided by their employer.

Although company pension rules were brought into force gradually, auto-enrolment rules now apply to all employers in the UK. So, every workplace must now offer a pension scheme to their employees.

Workers' eligibility criteria

Eligible employees who must be automatically enrolled include those who are:

• Not already in a workplace pension
• Aged 22 or over
• Under State Pension Age
• Earning more than £10,000 a year
• Working in the UK.

All eligible employees must be automatically enrolled into the scheme, and you must also make contributions to their pension.

However, there are exceptions, and you may have employees that you don't have to enrol by law.

You don't have to make contributions for scheme members who earn these amounts or less:

• £520 a month
• £120 a week
• £480 over 4 weeks

Where a worker is not enrolled into a workplace pension, you must inform them. However, employees still have the right to join the workplace pension scheme, if they want to.

What you must communicate to all employees in the workplace pension scheme

When you automatically enrol any employee into the workplace pension scheme, you must write a letter and tell them:

• The date they were added to the pension scheme
• The type of pension scheme and who it’s run by
• How much you will contribute and how much they must pay in
• How they can leave the scheme, should they wish.

Employers and employee minimum contributions

While the minimum employee contribution is currently 5% of their annual “qualifying earnings”, employers must contribute at least 3% to each employees’ workplace pension scheme.

Workplace pension scheme rules at a glance

For employees enrolled in the workplace pension scheme, you must:

• Pay at least the minimum contributions to the pension scheme on time (usually by the 22nd day of each month)
• Let employees leave (or “opt out”) of the pension scheme if they ask – if they opt out within one month, you may also need to refund any money they’ve paid
• Let employees rejoin the scheme at least once a year if they’ve opted out
• Enrol any employees who have opted out back in at least every three years if they are still eligible for automatic enrolment.

Actions to avoid

As with anything, there are actions that you are not allowed to make. For example, you shouldn’t encourage or force employees to opt out of the scheme or imply someone’s more likely to get a job if they choose to opt out of the pension scheme.

Should you have reason to close a workplace pension scheme, you must automatically enrol all members into another one.

How Aspira can help

Providing a suitable workplace pension for employees is more important than ever. Our pension governance services are designed to help you meet The Pension Regulator guidelines.

We provide truly independent consulting services across the spectrum of workplace pensions, from the initial steps of procurement, through to implementation and ongoing pension scheme governance.

We’ll help make sure that:

• You're achieving “good member outcomes” for employees in your scheme
• Your scheme is compliant with legislation
• The scheme is invested with the aim of giving you and your employees a healthy return.

Get in touch

If you’re interested in benefiting from a fresh approach to pension consulting and finding out how we can support you in delivering a high-quality workplace scheme to your employees, get in touch. Email info@aspirafp.co.uk or call us on 01454 632 495.

Please note: Workplace pensions are regulated by The Pension Regulator.

Investments can fall as well as rise and you may not get back the original amount invested.

The Financial Conduct Authority does not regulate some elements of automatic-enrolment.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Pension income could also be affected by interest rates at the time benefits are taken.