Unlocking a Golden Future: Find the right employee pension scheme for your business

There are many responsibilities involved when running a company. When it comes to business owners who employ staff, a major responsibility is that of pensions. Since 2012, employers must automatically enrol eligible employees into a workplace pension. A proportion of their salary is placed into your pension fund each month and in many cases, the employer will also pay in to this fund. The idea behind this scheme is that it allows workers to save for their retirement, with help from both their employer and the government.

Whilst this can be invaluable for workers, it can often be complicated for employers. Who is eligible for a workplace pension, what does the process of auto-enrolment involve and how do you go about choosing the right pension scheme?

Are you an Employer?

This may seem like a silly question but there are instances in which this can be a grey area, particularly with microbusiness. However, there is a full checklist on the HMRC website to signify what constitutes an employer. This being said, if you deduct NI and tax from your employees’ wages, this normally signifies that you are an employer.

Eligible Employees

Any eligible employees must be enrolled within a pension scheme, no later than six weeks from when they started work or when they became eligible (for example a change in pay or age). In order for an employee to be eligible, they must:

  • Be aged between 22 and the state pension age.
  • Earn at least £10,000 per year.
  • Normally work in the UK.


Once your employee has been enrolled into a workplace pension scheme, at least 8% of their qualifying earnings must be paid into the scheme each month. Of this 8%, at least 3% must be paid in by the employer but this is just the minimum and more can be paid if desired.

Each pension scheme is different but the average time at which an employee can withdraw this money ranges from 60-65.

Pension Schemes

Before employers can enrol their workers into a pension scheme, they must pick one. Therefore, what should be kept in mind when choosing a workplace pension scheme?

When choosing the right pension scheme for your employees, there are many factors to consider. Of course, the main consideration should be a pension scheme which is compatible with auto-enrolment.

Does the provider have a good reputation? After all, you’re likely to be dealing with them for many years and you want yours and you employee’s money to be safe.

Another factor to consider is the actual cost of the pension scheme, in the form of charges, penalties and fees. It’s always best to shop around to find a scheme that offers the best return on your investment.

One of the benefits of workplace pensions is that they offer tax relief to participants. This is something to keep in mind when choosing a plan. Pension schemes will offer one of two different types of tax relief- relief at source and net pay arrangements. Relief at source benefits your lower earning employees, for example those who don’t pay income tax. Net pay arrangements means that workers only pay tax on what is left of their pay, after the pension contribution has been taken, therefore it’s better for higher earners.

We all know that workplaces are continually in flux and circumstances can and often do change. Therefore, it’s important to regularly check current schemes, to ensure they continue to offer the best deal for you and your workers.

Whether it’s the legislation surrounding auto-enrolment or the arduous task of choosing the right pension scheme- it’s easy to feel overwhelmed in this area. Fortunately, the team at Fund Flow can offer expert support and advice on workplace pensions.