When do I need to set up a pension for my employees?

Employe Pension Blog header

The short answer for this is – probably as soon as you have employees! But of course, the reality of the ins and outs is that it’s never quite that straightforward is it!

I often find it simpler to work out what doesn’t apply, and then, by power of deduction, we’ll know what does! Have a work through this flow chart, and then we’ll talk in more details below …


Flowchart on employee pensions

Although there are times when, as an employer, you’re not required to set up a pension, such as when your workers are too young, or not earning enough, both of these are subject to change, so it is worth thinking about as soon as you’ve taken someone on.


And here are some things to know about pensions:

  • The minimum contribution is currently at 3% from employers, and 5% from employees. These are percentages of the ‘pensionable earnings’ (see the amounts in the flow chart!) 
  • There are many pension providers you can choose, but as a general rule, we tend to suggest Nest.
  • Once an employee becomes eligible for a pension, they must receive a letter informing them of this, and be given details of how they can opt out, and when they would be able to opt back in, should they wish.
  • Even if everyone opts out, you will be subject to periodic re-enrolment.
  • And, of course, there are times when employees who are eligible will want to opt out .. and maybe when some who aren’t will want to opt in!


The great thing is that if Pink Pig takes care of your payroll, we will handle all of the above, and you will simply get an email after each pay run, informing you of how much you need to pay into the pension. If you are needing to get a pension up and running, this is something we can help with too!

This one wasn’t as complicated as some of the things we have to discuss, but hopefully this will have made your obligations as an employer a little clearer. As usual, we’re here to chat! Drop us a message or head to our Get Started page to learn more about working with PPF