This Fact Sheet summarises the main legislative provisions requiring Employers to provide access to certain pension arrangements. It does not cover the detailed aspects of the rules under which any pension schemes operate, nor does it provide any form of financial advice.
All employers are required to automatically enrol "eligible jobholders" in a workplace pension scheme that meets certain qualifying criteria. This is a statutory requirement which is rigorously enforced by the Pensions Regulator. The Regulator has extensive powers to investigate and to fine non-compliant Employers, as well as in extreme cases imprison Company directors.
This Scheme was set up by the government in response to increasing concerns that a large number of individuals were not saving enough for their retirement. With additional pressures being placed on the state pension there is concern about how individuals will be able to afford to live during retirement. This is the reason why it was set up on an auto enrolment basis; the provisions of the Scheme are designed to ensure that as many individuals as possible are enrolled and remain enrolled.
An eligible jobholder is someone who:
Non eligible job holders are those who do not meet this criteria.
An eligible jobholder has the right to opt out of his employer's scheme, but he/she will be automatically re-enrolled every three years. Employers are prohibited from inducing existing workers or prospective workers to opt out of auto-enrolment at any time.
The processing requirements, which employers are required to comply with are as follows:
Workers have the right not to suffer any detriment in their employment because of their employer's breaches of the above regime and are entitled to bring proceedings in the employment tribunal.
The Pensions Regulator (https://www.thepensionsregulator.gov.uk) has further information and guidance regarding auto-enrolment.
Employers who enter into contracts to provide services to public sector entities may be required under the terms of the contracts to provide access to the Local Government Pension Scheme, the National Health Service Pension Scheme, or one or more of the Civil Service Pension Schemes (or in very rare cases a replacement "broadly comparable" pension scheme). The obligation to make this a term of the contract rests with the public sector entity, but nevertheless is usually inescapable for the contracting Employer. Access to the public sector pension schemes may be required for employees of the public sector entity which transfer to the Employer under TUPE, but can extend in certain circumstances to new employees engaged in the services for the public sector entity as well. These are very complex situations in which specialist legal advice should be sought.
Where there is a transfer of a business subject to TUPE, any employees employed in the business will transfer with the business on their existing terms of employment. This includes pension entitlements. However, any benefit under an occupational pension scheme that relates to old age, invalidity or survivors' benefits will not transfer to the buyer/transferee under TUPE.
On transfer, the receiving employer is required to set up a replacement pension arrangement. The replacement pension requirements for TUPE transfers are complex situations in which specialist legal advice should be sought.
This document has been created by, or on behalf of ESP Ltd, as a general document and as a guide in relation to its subject matter and has not been bespoke drafted for you or the specific circumstances in which you are looking to use it. Prior to using this document and undertaking any HR process you must consult your organisation’s own policies and procedures to ensure that you do not do anything in conflict with your own policies and procedures. If in any doubt as to how to use this document or, if you require any legal advice, please feel free to contact ESP Ltd on 0333 006 2929 and our legal team will be more than happy to assist. ESP Ltd will not be liable in any way for any actions undertaken by you or your use of this document unless we have been consulted regarding your use of this document as legal advisor to your business or have bespoke drafted any documentation in response to a specific support request.