With the government planning changes to the workplace pensions regime, it is a great time to review your pensions obligations as an employer. Remember: setting up and managing a workplace pension scheme is a legal requirement for all UK employers. Understanding your duties around pensions is essential to support your staff andavoid fines.
Have a look at our helpful guide to get ahead on your pension duties.
Setting up a workplace pension scheme:
a. Choose a pension provider
The first step in setting up a qualifying workplace pension scheme is to choose a pension provider. There are several choices of schemes each with different enrolment costs and benefits; you can look at our handy Q&A guidance on how to choose and what factors to take into account.
b. Enrol eligible staff
Once you’ve chosen your scheme, you need to assess your workforce to determine which staff need to be automatically enrolled. You can use specialist providers for this or do it yourself: eligible jobholders are those aged over 22 and earning over £10,000 per year.
Once you’ve identified eligible jobholders, you must enrol them in your pension scheme and start making contributions. You are also required to provide them with information about their enrolment, their rights, and the scheme itself.
Other staff do not have to be enrolled automatically, but you must still offer them the option of joining if they want to. For more on eligibility and enrolment, see our Q&A here.
c. Manage opt-out requests
Although you are obliged to set up a pension scheme for your staff, participation is optional for them. If an eligible jobholder decides to opt out, there is a specific process you must follow:
i. Provide an opt-out notice that includes the legally required wording.
ii. Ensure the opt-out notice is submitted to you within one month of either the enrolment date or the date you provided the enrolment information—whichever is later.
iii. If the notice is invalid, you must inform the staff member and explain why. In such cases, the opt-out period is extended to six weeks to give them a chance to send you a proper notice.
iv. Inform your pension provider of any opt-out and return any contributions (after tax) to the employee.
You can find our ready-to-go template opt-out notice and letter here. You can also find more information on opting out in our Q&A here.
d. Pay contributions
As an employer, you must pay at least 3% of an eligible staff member’s qualifying earnings into their pension. Employees must contribute 5%, making the total minimum contribution 8%. Contributions are generally based on earnings between £6,240 and £50,270. See our Q&A here for more detail on contributions.
e. Complete a declaration of compliance
Once you have enrolled your staff into the scheme and dealt with any opt-out requests, you must inform The Pensions Regulator that you have complied with your auto-enrolment duties by completing a declaration of compliance. This must be submitted within five months of your first staff member starting work, and again within five months of every re-enrolment date (see below). Find a link to the gov.uk form here.
Don’t forget: re-enrol staff every three years
Even if staff have opted out, you are legally required to re-enrol eligible jobholders every three years. This applies to those who:
i. are aged between 22 and state pension age
ii. earn over £10,000 annually; and
iii. left the scheme more than 12 months before the re-enrolment date.
You must re-enrol within six weeks of your re-enrolment date and notify the staff member in writing. A fresh declaration of compliance must be submitted within five months of this date. See Q&A here for full details on the process.
Keeping records and ongoing duties
Keeping proper records is a legal requirement. You must retain:
i. details of the pension scheme, such as its name and reference number; and
ii. staff information, including enrolment and opt-out notices, contribution amounts, and pay reference periods.
These records must be kept for at least six years (four years for opt-out notices)
In addition, you must continue to:
i. assess new staff for eligibility
ii. enrol those who become eligible due to changes in age or earnings;
iii. pay contributions on time; and
iv. inform your pension provider and The Pensions Regulator of any relevant changes.
See Q&A here for an overview of ongoing duties.
Conclusion
Managing a workplace pension scheme doesn’t have to be complex, but it does require attention to detail and ongoing compliance. For more detailed information on any of the steps above, you can refer to our detailed guidance on enrolling staff into a pension scheme and associated documents. By staying on top of your pension duties, you ensure your business remains compliant with regulators and supportive of your employees.
The content in this article is up to date at the date of publishing. The information provided is intended only for information purposes, and is not for the purpose of providing legal advice. Sparqa Legal’s Terms of Use apply.
Rahul joined Sparqa in 2025 from the Commercial Court, where he served as a Judicial Assistant. He has active interests in commercial, corporate and employment developments which he pursues alongside teaching undergraduate law.