Pensions for employees

From October 2012 and 2017 all employers will need to have a registered pension scheme into which they will auto enrol all eligible staff into and will also have to pay contributions into it.


If you have employees:

  • not already in a qualifying scheme
  • are aged 22 or more
  • are under State Retirement age
  • who earn over the personal allowance for tax (£8,105 2012/13)
  • who work or usually work in the UK

this will affect you.


The employer can use a pension scheme of their choice or the Governments default scheme ‘the National Employment Savings Trust’ (NEST).

The employee could use a salary sacrifice scheme which means they sacrifice a part of their salary in exchange for the employer paying into their pension scheme. This reduces the employees tax and national insurance and the employers national insurance liability as the pension contributions are a tax free benefit in kind with no actual reduction in the overall salary paid to the employee.


This will apply to employers with over 250 employees between 1 October 2012 and 1 February 2014 and to employers with less than 250 employees between 1 April 2014 and 1 April 2017.


Although the amounts are being phased in the contributions required will eventually be:

Employees – 5%

Employers – 3%

For eligible employees earning between £5,564 and £42,475.


Seek advice now, find the pension scheme to suit you and know what it will cost you so you can plan ahead, take away the worry and be prepared.