You need to pay the correct contributions on time to your staff pension scheme. If you don’t, you risk being fined by The Pensions Regulator (TPR).
Key points
- You need to deduct contributions from your staff’s salaries and pay these and your contributions over to the scheme on time and accurately.
- After you have set up your scheme, if you’re unsure what to pay and when, contact your pension scheme provider or trustees.
- If you fail to contribute to your staff pension scheme correctly or on time you risk being fined by TPR.
- There are specific records and payment information you must keep.
How much you must pay
The amount you must contribute to the pension scheme is determined by the scheme’s rules. However, if you’re using the scheme for automatic enrolment there are minimum contributions you must pay.
The minimum contributions that you must pay into your staff’s pension scheme are shown in the table below – they’re currently a total contribution of 8% with at least 3% employer contribution.
You will usually pay pension scheme contributions either as a fixed amount or based on a percentage of earnings.
| Date | Employer minimum contribution | Total minimum contribution |
|---|---|---|
| From 6 April 2019 | 3% | 8% (including 5% staff contribution) |
Your minimum employer contribution
Pension contributions are usually expressed as a fixed sum or a percentage of earnings. If they’re expressed as a percentage you will need to confirm salaries with your pension provider / trustees regularly as necessary from time to time.
You also need to decide what elements of staff pay are used to calculate pension contributions, subject to any overriding legislative requirements, such as in relation to automatic enrolment. You may decide that only basic pay is pensionable but not bonus or overtime payments. Let your pension scheme know what you decide.
Automated payroll
If your system’s automated, your payroll system or provider needs to calculate contributions and make the correct deductions from staff pay. You should also make sure your payroll system is compatible with the chosen pension scheme. If you’re unsure, check your payroll software or contact your payroll provider.
Remember, you need to tell payroll what rate of contribution is due and what earnings to use to calculate contributions.
When you must pay your contributions
You need to pay your contributions to your staff pension scheme on time. This includes calculating and deducting contributions from your staff's salaries. You must agree the due dates for paying contributions to the scheme with your trustee or provider.
However the law requires that when you deduct contributions from your staff's pay you must pay these to your staff pension scheme no later than the 22nd day (19th if you pay by cheque) of the next month.
There are special rules for the first deduction of contributions on automatic enrolment under the Pensions Act 2008.
You risk being fined by us if you don’t pay on time.
You may agree an earlier date to pay your employer contributions with your trustees or administrators. However, it’s easier if you pay your contributions on the same day as your staff contributions.
Quick guide to paying contributions to personal and DC occupational pension schemes — find out how to set up your scheme correctly and understand what contributions you and your staff have to pay and when they must be paid by.
Keeping payment information and records
Incorrect or out-of-date information is the main cause of payment failure and disputes between an employer and their scheme provider or trustees.
You must keep information and records about what contributions you pay to your pension scheme for six years (in most cases). This will help you ensure the correct contributions are paid and provide evidence if there’s a dispute.
Records you should keep include:
- staff gross earnings
- staff and employer pension scheme contributions due to be paid (and if different the actual amounts paid)
You need to keep information on contributions and membership up to date and communicate any changes to your pension scheme provider or trustees.
Refer to our information on record-keeping duties for employers for more details.
Pension fund limits
There are limits to the amount which can be held in a pension fund and the amount that can be contributed to it each year for a member without the imposition of certain tax charges.
Go to understanding the annual allowance for pension schemes on HM Revenue and Customs website.
If you’re unsure what to pay and when, contact your pension scheme provider or trustees.
Defined benefit funding
If you run a defined benefit (DB) scheme, you need to be aware that most schemes providing any defined benefits need to meet a statutory funding objective, which assesses the required levels of funding for a scheme.
As an employer, you’ll need to work closely with trustees to ensure that your scheme meets these funding requirements.
In particular, you’ll have to agree with the trustees:
- a statement of funding principles
- a schedule of contributions consistent with these principles
Where the statutory funding objective is not met, you have to agree on a recovery plan setting out the steps that will be taken to put things right.
For more information go to funding your defined benefit scheme.
Detailed guidance
Our detailed guidance is aimed at professional advisers and employers with in-house professionals.
Records that must be kept by law under the automatic enrolment employer duties.