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Can an employee reduce their pension contributions?

Pension savings can be a very effective way to save for the future. Your employee may not be aware of how much money they’re missing out on if they stop paying into their pension pot. They should visit our website before they make a decision, to understand what they risk losing by stopping or reducing their contributions.

What if your employee wants to stay in the pension scheme, but doesn’t want to pay the balance to meet the legal minimum contribution?

An employee can decide that they’d like to reduce their pension contributions so as they’re not meeting the legal minimum contributions. This means the employee will no longer be classed as ‘eligible’ for auto-enrolment’.

It should be their choice to pay below the minimum levels, and their employer is legally not allowed to suggest, encourage or induce them to do so.

Employers can choose to support the employee’s decision to reduce their pension contributions by following our guide,’Paying below the minimum contribution levels’.

Reducing their pension contributions means:

  • the employee should remain in the pension scheme as an active member.
  • you don’t have to continue paying pension contributions for them – but you can if you want to and can choose how much you’ll pay.
  •  you may need to re-enrol your employee into the pension scheme every 3 years (sometimes sooner). They’ll then have the opportunity again to see if they’d like to contribute to meet the total legal minimum contributions.
  •  the employee can decide to join the pension scheme and pay towards the total minimum contributions at any point in the future. They’ll just need to let their employer know in writing. This can be a signed letter or email, if it includes a statement to say it has come from them.

If you choose not to enable your employees to pay below the legal minimum contributions, they can opt out and pay pension contributions directly into their pension pot by Direct Debit. They’ll still benefit from the tax relief on their payments, and you won’t need to contribute. Your employee should be directed to our website if they’d like to set this up.

I can’t pay for contributions, what happens now?

By law, when you take contributions from your employees’ wages, you must pay these to your pension provider by the 22nd of the following month.

What should I do if I’m unable to pay for contributions?

Things are very difficult for many businesses right now, and we understand that you may be experiencing problems paying for your employees’ pension contributions.

The Pensions Regulator (TPR) has said that auto-enrolment duties continue to apply as normal, including your re-enrolment and re-declaration duties. However, they’re taking a measured approach to this.

Even if you’re unable to pay for contributions, you should continue to send us your employee data every pay period. This means that we’ll be able to allocate contributions to your employees quicker once you are able to make payment.

We’ll still send automatic reminders to you when your contributions are late. We’re on hand to support you with any difficulties you may be facing, so please get in touch as soon as you can if this applies to you.

What could happen if I don’t pay?

When contributions are 90 days late, we’re obliged to report the case to TPR, and write to all affected members. You may be fined by TPR if you don’t pay outstanding contributions by this date.

When you’re able to pay

Simply log into your Online Services account and select ‘Make a payment’ from your account home page.

We’ll apply your payment first to the amount that has been outstanding the longest. This is to help you avoid falling into further arrears.

If you pay by automated collection

Please note, if you send us contributions data or ask us to take payment within 6 working days of your collection date, we won’t be able to request this from your bank in time. We’ll collect this payment on the next collection date. Our system sends automated emails, so you may receive reminders while we’re processing your contributions.

What support is available?

If you’re in financial difficulty due to the coronavirus outbreak, the government has made support available to employers.

Visit the government website for information on coronavirus support available.

The Pensions Regulator is also frequently updating their guidance to employers – check their website for the latest information and guidance.

Do I have to enrol staff if they have a one-off increase in wages?

After your staging/duties start date, staff who work irregular hours or earn flexible incomes should be enrolled the first time* they earn over the auto-enrolment threshold of £192 a week or £833 a month if paid monthly.

Once staff have been enrolled, you must pay regular contributions into their pension scheme (unless they’ve decided to opt out). If the staff member’s earnings fall below £120 a week or £520 a month, you may stop paying contributions unless the rules of the pension scheme they have enrolled into require them to continue.


* Note that under the postponement rules, you can delay enrolling staff into the pension scheme when they first meet the criteria to be an eligible jobholder for up to three months.

Which employees can ask to join?

Not all employees have to be put into a pension scheme automatically, but they can still ask to join. Whether they’re enrolled automatically or not depends on how much they earn, their age and whether they normally work in the UK.

If they’re enrolled automatically they’re known as ‘Eligible jobholders’ .

Then there are two categories for the employees who can ask to join:


What do I do if no employee needs to be auto-enrolled?

You only need an auto-enrolment pension scheme in place by your staging date if there’s someone to auto-erol enrol on this date. If there’s no one who needs to be auto-enrolled then there’s no need to have a pension scheme in place.  However, it may be useful to decide, before your staging date, which pension scheme would be used if the person or people you employ actually need to be enrolled (or ask to join).

Even if there are no employees to be auto-enrolled, you will still have a duty to write to your employees and complete your declaration of compliance.


Does your scheme allow postponement?

Yes, the maximum legal period that you can delay putting employees into your pension scheme is three months if you’ve a monthly payroll and 12 weeks if you’ve a weekly payroll. If you plan to do this, your staging date stays the same but your first pay reference period (PRP) start date will change according to when we’ll expect that first contribution. Postponement is an option under the Simply Tailor sign-up route.


If I have carers do I have to comply with auto-enrolment duties?

If you employ the carer you need to comply; and if you and others employ the carer you are each responsible based on the earnings you each pay them. If the carer works for an agency or their own limited company that agency/company are responsible for complying with auto-enrolment duties.

If they’re self-employed there are criteria to decide whether duties still apply. Does the carer:

  • have control of the hours they work?
  • have their own public liability insurance?
  • provide care services for other people?
  • register themselves as self-employed with HMRC?
  • not get paid when on holiday or unable to work due to sickness?

If most or all of the above are true, it would be reasonable to consider that they’re undertaking the work as part of their own business. If they’re undertaking the work as part of their own business, they can be considered ‘truly self-employed’ and aren’t subject to auto-enrolment.