Automatic Pension Enrolment - Choosing A Scheme
You’ll need to have a pension scheme that is set up for automatic enrolment. You and your staff will pay money into this scheme to help your staff save for their retirement.
This needs to be done around 6 months before your staging date, as it can take some time to complete.
Unless you want to use an existing pension scheme for automatic enrolment, you’ll need to find a scheme yourself or get help from your accountant or a financial adviser.
You should look at different schemes before you decide which is suitable for you and your staff. For example, you could look at:
1. The government scheme
2. Independently reviewed schemes
Some providers have had their pension schemes independently reviewed to help them show that they meet a good standard of administration. This is known as the ‘master trust assurance framework’.
You may be able to use the following schemes with master trust assurance, which have said they are open to small employers looking for a scheme provider for automatic enrolment.
When choosing a scheme, you should consider if it is suitable for your lower paid staff, in particular whether they will receive tax relief on their contributions. If the scheme operates relief at source, staff earning under £10,600 a year (or less than £11,000 from April 2016) will be able to get tax relief from the government. If the scheme runs net pay arrangements, these lower paid staff will not get tax relief and will pay more for their pension than if you use a ‘relief at source’ scheme. Higher paid staff earning over £42,385 will need to claim back their full tax relief by completing a self assessment if the scheme operates relief at source but will get their full tax relief automatically added into their pension fund if the scheme operates a net pay arrangement. More information on tax relief is available in . Make sure you check this issue properly before choosing a scheme for your staff.
Schemes using relief at source - The Pension Regulator suggests these may be suitable for both your higher and lower paid staff:
Schemes using net pay arrangements may be suitable if you do not employ lower paid staff (earning under £10,600, or less than £11,000 from April 2016):
If the scheme uses net pay arrangements, then for any of your staff who earn under £10, 600 (or £11,000 from April 2016), the deductions from their pay will be 20% higher than if the scheme runs relief at source. This means that they pay 20% more for their pension. You should check that your lower paid staff are not worse off under net pay arrangements.
3. Schemes listed by industry bodies
You can find lists of schemes on the following websites:
With these schemes, make sure you also check whether the scheme is suitable for low earners.
If you have an accountant, they may be able to help you find a scheme or a financial adviser that can help.
If you need help finding a financial advisor, The Pensions Regulator suggest the following websites:
You may already have a scheme for your staff – you might know this as a ‘stakeholder pension’. If you want to use your existing scheme, ask the provider if it meets the automatic enrolment rules.
If you can’t use it, you’ll need to choose a new scheme to meet your automatic enrolment duties.
For more information on automatic pension enrolment, visit or call our member helpline on 0845 305 4230.