The business environment changes quickly, and everything from economic uncertainty to changes in technology and market structure can have an effect on the circumstances of your business. Equally, staff turnover and enforced absence are facts of life for even the most stable of business - all of which can affect the way you need to manage your new workplace pension scheme.

An important part of running your scheme will be managing your employees’ expectations of what will happen if your business's circumstances change. Below we cover some of the situations that may arise for you or your employees in the future.

If you go through financial trouble

What could happen:

The worst scenario that your business may face in the future is financial trouble and even bankruptcy. Depending on the type of pension that your workplace pension scheme is, bankruptcy may affect the security of your employees’ pension savings.

How it might be resolved:

If your workplace pension scheme is a Group Personal Pension, your employees’ pensions will be protected. This is because it will be the pension provider who runs the pension scheme directly.

Ill health

What could happen:

If any of your employees are diagnosed with a condition that affects their ability to work, they may choose to take the option of early retirement; or, depending on the type of pension that you provide, they may have an option to take an ill health pension.

How it might be resolved:

Some workplace benefits packages include cover – such as rehabilitation support – to help employees recover from illness and get back to work as quickly as possible. It’s worth considering the broader package of benefits on offer when choosing a workplace pension scheme.

In the situation that an employee is diagnosed with a critical illness which means their life expectancy is less than 12 months, they may be able to take the whole of their pension pot as a lump sum.


What could happen:

No employer relishes the prospect of making employees redundant, but if this is a necessity the affected employee will need to think about what they want to do with their pension savings going forwards.

How it might be resolved:

The employee who is being made redundant will normally have a number of choices regarding the future of their pension:

  • They can transfer their pension pot to a pension scheme run by a new employer or transfer the value into their own personal pension scheme.
  • They can keep the pension scheme that they have with you and withdraw the pension upon retirement – this is known as a ‘deferred’ pension.
  • They could also take their redundancy payment to make additional pension contributions. With employer permission, they can also sacrifice part of their redundancy payment as an employer contribution (this is referred to as ‘redundancy sacrifice’).

Hiring staff

What could happen:

Whenever you hire a new member of staff, you will need to assess whether they are eligible to join your workplace pension scheme. 

How it might be resolved:

If they earn £10,000 per annum or more and are aged 22 or above, they will need to be auto enrolled. If new employees earn less than £10,000, or are aged 16-21 or state pension age-74, they can still choose to opt in to the workplace pension scheme.

If you have a valid business reason, such as hiring new staff on short term contracts or expected fluctuations in their income, you can postpone assessing new employees for their auto-enrolment eligibility for up to three months.

Parental leave

What could happen:

Whatever your business’s parental leave arrangements may be, employees have rights concerning their workplace pensions which will need to be made clear to them.

How it might be resolved:

If an employee takes parental leave whilst they are a member of the workplace pension scheme, they will continue to remain a member and continue to make employee contributions and receive employer contributions to their pension pot during their leave of absence.

  • For both defined benefit and defined contribution pension schemes:
    • The employer contrubutions paid into the employee's pension will be based on the amount of pensionable service from before the employee went on parental leave.
    • The employee contributions, however, will be based on their actual earnings during parental leave.
  • For defined benefit schemes, if an employee decides to take a period of unpaid leave, this will not count towards continuous service. But the time before and after the employee takes unpaid leave will count as continuous service and they can then choose to add additional contributions once they return to work.

Find out more about auto enrolment

Auto enrolment doesn’t have to be challenging. We’ve got all the information you need to get up and running with your workplace pension scheme.

Aviva Workplace Pension

Our workplace pension is designed to give you a scheme that’s easy to set up and administer, ideal for your auto enrolment needs.

Find out about the Aviva Workplace Pension


Get a quote and see how Aviva can help you and your business.


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