A step-by-step guide to setting up a workplace pension

1. Confirm who needs to be contacted

Under the Pensions Act 2008, every employer in the UK must put certain staff into a pension scheme and contribute towards it. This is called 'automatic enrolment'.

First thing's first: the pensions regulator needs to know who they should be sending all information to. This person, known as the 'employer contact', is ultimately responsible for ensuring that all legal duties are met at the pub. If another member of staff or an accountant is helping to set up the pension scheme, they can be nominated as an “additional contact”.

This information can all be provided either online on The Pension Regulator’s website​, or by calling 0345 600 1011.

Once the regulator has been told who to contact, the employer contact will need to find out the staging date. This is the date that staff by law will need to be put into a pension scheme. The dates are being staggered, so that not all employers are affected at once, but it could be any date from tomorrow to a date two years from now. The most important thing is finding out when it is so that you can be completely prepared for when that day comes around.

2. Choose a pension provider

Now that you know your staging date, it is time to start looking into which pension provider should be used. This can be done through one of two ways: you can either find a provider yourself or seek help from a financial adviser.

The second of these options is likely to be a more hassle-free approach, but also brings with it additional expense. However, for Sylvia Lodge, director at the Nag’s Head in Reading, Berkshire, she found that seeking out a provider herself and setting up the scheme herself without any outside help proved surprisingly easy.

“I had kept putting it off until I knew I would have to do it,” she says of the process of going through auto-enrolment for her staff. NEST​ (the National Employment Savings Trust) is the Government-run scheme and I thought it looked a good one, so that was the one I went into.

“It was ultimately easy to use and Government-backed, so I thought that if anything did go wrong, it would be down to the Government to fill the gaps.”

NEST is one of several schemes recommended​ by the pensions regulator as being suitable for small employers, such as pubs. It was set up in 2010 as an easy-to-use scheme for auto-enrolment that is free for employers and fulfils all the requirements needed in the wake of the new laws around auto-enrolment.

Yet NEST is not the only pensions provider that has said it is open to employers of all sizes.

The likes of Aviva and Standard Life also offer schemes that are easy to manage and can be completely set up online.

As much as there are plenty of hassle-free pension providers, the pensions regulator still recommends that you have chosen a provider and started to set up a scheme six months before your staging date to allow for any hiccups along the way.

3. Work out who needs to be put in the scheme

When your staging date arrives, that is the day to establish who needs to be enrolled in the scheme. To find this out, you will need to have the age and average monthly salary of each member of staff.

All staff aged between 22 and state pension age (this varies for each person but can be calculated at gov.uk​) who earn more than £833 a month (£10,000 a year) will need to be enrolled in the scheme and will thus start paying a pension unless they deliberately opt out of the scheme.

Some bar staff may be on flexible contracts because of seasonal variations in business. That makes things a little bit more complicated for assessing if they need to be paying into a pension scheme. The simplest way around this is to have a payroll system that is equipped for calculating pension payments that can at each pay cycle, calculate the necessary contributions for each member of staff.

“Make sure that your pay system software is up to date and you can do a pension on it,” Lodge from the Nag’s Head advises. “We use software that is updated every year, so it includes pensions on an update.” 

There will still be staff that fall outside of the criteria for auto-enrolment. However, they will have the option to still pay into the pension scheme, so need to be told about pensions in the same way as staff being enrolled in the scheme.

Employers have already been issued with compliance notices by the Pensions Regulator for failing to tell staff about the pensions options available to them, even though the staff didn’t, by law, have to be put into the scheme because they were aged under 22, over state pension age or had an annual salary of less than £10,000.

4. Write to staff

Within six weeks of the staging date, staff will need to be told either that they have been enrolled into a pension scheme and that they have the option of opting out. Or, for staff not automatically enrolled, that a pension scheme is available and they can opt in.

Templates​ for the letters that need to be sent to staff are available both via the Pensions Regulator and through the various pension providers.

Lodge advises: "Don't put it off and make sure you have all the up-to-date information on staff because it requires up-to-date email addresses, home addresses and other details. I would recommend licensees have all that information prior to starting so they don't have to stop midway through the process to get more information.” 

5. Start paying into the scheme

Once the staging date has passed, pension payments will need to be taken out of the pay packets for all staff enrolled in the scheme.

Lodge saw this as one of the most beneficial times to have payroll software. “It’s brilliant. The system calculates how much the pension payment should be. I just take those figures and pay it to the pension provider, NEST,” she says. 

6. Declare compliance

You are almost there. The final part of the process is merely declaring to the pensions regulator that you have set up a scheme and are compliant.

This needs to be done within five months of enrolling the staff in a pension scheme on your staging date.

The pensions regulator estimates that if you have all the necessary details, this will just take 15 minutes online​.

Once that is all done, your pension scheme is set up. From here on, you just need to keep paying money into the pension scheme from your payroll whenever you pay staff and keep an eye on whether staff need to be added into the scheme.