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Employers' duties
Do I need a pension?

Do I need to set up a workplace pension?

By now it’s fairly well known that in general all employers need to comply with Automatic Enrolment. There are some exceptions such as limited companies whose only employee is the sole director. (For a detailed list go to http://www.thepensionsregulator.gov.uk/).

Some employers – those that never pay over the auto enrolment trigger could comply with the regulation but not actually set up a pension. We recently looked at a client with 5 workers. 3 directors all earn £695 a month and 2 part time assistants earn £350 and £450 a month respectively so nobody is going to trigger auto enrolment. The company is required to comply with Automatic Enrolment but this compliance does not require the set up of a pension.

The employer in question is proposing to meet its staging duties by writing a comprehensive letter to all workers explaining all the categories of worker and their right to opt-in. They will complete an assessment of workers on the 1st payroll which includes the staging date. A certificate of compliance will be sent to The Pensions Regulator (TPR). The company will have met its statutory duties but will not have actually set up a pension which it will never need.

There is a rider to this solution which must be understood: Should anyone decide to opt in or a new worker joins that is over the trigger point, the company has 6 weeks to set up a scheme and enrol that worker. We would also suggest that assessment be set up in payroll to ensure that any change is automatically picked up because ‘out of sight out of mind’ could prove very costly.
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DCS Sunderland  T: 0191 514 7009  E: payinfo@dcspayroll.co.uk
DCS Glasgow T: 0141 339 4561 E: carlo@dcspayroll.co.uk
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