Law guide: Employment

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Pensions and pension contributions

Pensions and pension contributions

Automatic enrolment

You should now have put eligible workers into a workplace pension scheme. This is known as automatic enrolment. The Pensions Regulator can help you check if your worker is eligible and has an online tool that will help you work out your obligations. Both you and your worker will have to pay mandatory contributions into the pension scheme.

Workers may opt-out of the auto-enrolment scheme. If a worker isn't eligible for automatic enrolment, they may still have the right to opt into or join your workplace pension scheme if they ask - in some cases, you may still need to pay an employer contribution.

Contractual enrolment

Instead of automatically enrolling only eligible staff, you can choose to immediately enrol all workers into a pension scheme when they first start working for you. This is known as contractual enrolment. This avoids the administrative burden of having to assess the eligibility of your workers. As long as the pension scheme is a 'qualifying scheme' (i.e. it could be used for automatic enrolment), workers can be contractually enrolled into that scheme.

Contractual enrolment requires workers to consent to being put into the pension scheme and for deductions to be made from their salary for their contributions. This consent is usually obtained by including an appropriate clause in their contract.

The effect of contractual enrolment is that the employer's automatic enrolment duties do not apply to a worker while they are an active member of the scheme they were contractually enrolled into. However, the automatic enrolment duties will apply to that worker as soon as they stop being an active member of that scheme.

The rules and responsibilities for contractual enrolment are different from those for automatic enrolment. See the detailed guidance (PDF) from the Pensions Regulator for more information.

Advising workers

You should not advise workers about the financial benefits or provide any financial advice on the chosen scheme but should simply provide a channel to allow the worker to discuss these matters with the scheme provider. You can provide help and guidance, give additional information or interpret the information, but should be careful not to advise workers. The provision of financial advice is strictly controlled by the Prudential Regulation Authority.


You must keep a record of the direct payment payroll arrangements, showing the rate and dates of contributions. Keep separate records for contributions made by you and the worker. Keep them for at least 6 tax years.

This is a complicated area and tax relief may be available to employers who contribute to a workplace pension scheme that is approved by HM Revenue and Customs.

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