Every employer is obligated by law to offer a workplace pension scheme that meets specific criteria determined by the government. The employer is also bound to make contributions to the pension scheme where employees are paying into.
Auto Enrolment Pension
Providing a workplace pension is no longer optional but an obligation for employers. The Pensions Act 2008 made it mandatory for employers to automatically enrol (i.e. auto enrol) employees into a pension and pay into their employees’ pension scheme.
The law has been brought into force gradually, beginning with big employers before rolling out to smaller workplaces. As of early 2018, Auto Enrolment rules now apply to all employers in the UK.
Who does the workplace pension law apply to?
Every UK-based employee that earns a minimum of ₤10,000 per year, between 22 and a State Pension age, gets automatically included in a workplace pension.
Auto enrolment pension threshold
Currently, the minimum employee contribution threshold into the auto-enrolment scheme is set at 5% of the yearly “qualifying earnings”. The employer is also obligated by law to pay a minimum of 3% as well.