As individuals, pensions can be a minefield to understand but as a business owner with employees, they can get even more complicated. It’s important to understand your legal requirements and your options.
As an employer, if you employ 1 or more person between the age of 22 and state pension earning age earning over £10,000 a year you are obliged to enrol them on a workplace pension under the Automatic Enrolment rules, which make up part of the Pensions Act 2008. A workplace pension receives contributions from both the employer and the employee. These contributions are set at a minimum of 3% from the employer and a minimum of 5% from the employee.
Employees do have the right to opt out of this scheme and as an employer you would need to obtain a copy of their choice to opt out in writing. On the flipside, employees who do not meet the criteria for an occupational pension, can opt in. If you are a sole director, you are exempt for Automatic Enrolment, but you need to declare your exemption.
It is however worth investigating your pension options as certain schemes can be set up where you and your company contribute. As an employer you must register with The Pensions Regulator at www.thepensionsregulator.gov.uk/en
As accountants we can’t offer advice regarding pensions, but we can help you understand the tax benefits and relief that can be achieved from your pension contributions and put you in touch with someone who can offer guidiance around pensions.
By Michelle Morris on 08/03/2022 06:00:00