Auto enrolment: key topics

Salary sacrifice is where an employee agrees to give up part of their salary or bonus in exchange for a benefit paid by their employer; in this case, the benefit would be a pension contribution. It will involve a change in contract between the employer and employee. After sacrificing the agreed amount, you, the employer, would then make a payment of the equivalent amount into the employee's pension pot.

As a result, they receive a reduced salary, meaning the National Insurance payments that you and your employee pay will be lower. 

Salary sacrifice may not be suitable for all employees, for example, it may affect the level of some future state benefits or affect an employee's ability to borrow. Employees on the relevant minimum wage standard can't use salary sacrifice, as their pay can't be reduced below that minimum. They can, however, make pension contributions from their post-tax pay.

If you use salary sacrifice, when you make payment contributions on behalf of your employees, you will need to send this as an employer pension contribution.

We charge an on-going fee each month to run your workplace pension scheme. In return for this fee, we provide a software and support package that’ll help you with the administration involved in running your workplace pension.

The fee will begin from the start date of your scheme.

This fee does not cover your pension contributions. Your pension contributions will need to be paid to us each month using MyAvivaBusiness.

Yes, all eligible employees must be auto enrolled into a pension scheme before they can opt out. Your employee will need to contact Aviva once they’ve received their membership pack to tell us they wish to opt out. If a pension contribution has already been received before the employee opts out, we will refund the contribution back to you.

Staff who earn £833 a month (or £192 a week) during a pay period and are aged 22 to state pension age are classed as eligible jobholders. You must automatically enrol them into your pension scheme and make contributions for them (unless you’re using postponement).

Once a member of staff has been auto-enrolled into the pension scheme, if their earnings drop beneath the relevant minimum eligibility criteria in subsequent months, they will still remain a scheme member but they may not have to pay contributions, depending on the way you calculate them.  If they want to leave the pension scheme, they will need to tell you to stop contributions, and you will need to make them a leaver. If they stop paying contributions, you aren't obliged by law to continue the employer contributions you are funding directly.