Workplace Pension FAQ
Workplace pensions FAQs
If you’ve got a question, browse our FAQs to see if the answer you’re looking for is here. As one of the UK’s leading providers of workplace pensions, we’ve got the knowledge and expertise to guide you through the process from start to finish.
What is auto enrolment?
In 2008, new pension rules were introduced that required all UK businesses to provide a workplace pension by 2018. All employees who satisfy a certain criteria are automatically enrolled onto a workplace pension scheme in a process known as auto enrolment unless a suitable pension is already in place.
Does auto enrolment apply to me?
If you employ one or more people aged 22 or over who earn a minimum of £10,000 per annum (the minimum qualifying earning for 2017/2018), you’ll need to provide a workplace pension scheme.
When will auto enrolment start to affect me?
You’ll need to have a workplace pension in place by your staging date or duties start date. If you first employ someone between 1 July and 30 September 2017, your duties will start on your staging date, 1 February 2018. If you first employ someone on or after 1 October 2017, your auto-enrolment duties will start at the same time as your PAYE duties.
It’s important that you have a workplace pension scheme set up and ready to go before your staging date or duties start date. If you don’t, you could be fined by The Pensions Regulator. We still accept companies that are late starting their AE duties, and by setting up a pension scheme quickly you can prevent fines from escalating. From October 2017, your auto-enrolment duties will start from the same date as your PAYE duties.
I run a small business. How can Aviva help me with auto enrolment?
We’re specialists when it comes to helping small businesses. In fact, our workplace pension scheme comes with a whole host of benefits especially for businesses like yours, including:
- Flexible pricing
- UK-based helpdesks and live chat
- Online training and support materials
- Employee discounts and benefits
On top of that, we’re rated A+ for financial strength, with a 5 Star rating from independent financial researcher Defaqto – so you know that you’re getting a quality workplace pension solution.
Should I speak to a business adviser before setting up my scheme?
We’re always happy to help if you have any queries, but it’s worth bearing in mind that we can only offer information and not advice. If you think you might benefit from some additional support or advice about setting up a workplace pension scheme, it may be worth speaking to an independent financial adviser.
How much will I need to contribute to my employees’ workplace pension plans?
The amount you’ll need to contribute to your employees’ workplace pension plans will vary depending on they type of pay used to calculate pension contributions. Find out more information about pension contributions.
What is the contribution phasing timeline?
Minimum pension contributions will gradually increase between now and April 2019, and may be subject to further changes in the future. This is known as phasing. Find out more about pension contribution phasing.
Can contribution levels vary between employees?
Yes – under auto enrolment legislation, you can make contributions at different rates for different groups of employees. Remember, though, that auto enrolment legislation doesn’t replace any other employment legislation, so you’ll need to make sure that you comply with all your duties when you make this decision.
Can I make single contributions to a pension?
Yes. You’ll still need to make sure that you make monthly minimum pension contributions, but you can make additional one-off contributions too. For instance, after an employee has been awarded a bonus payment, you might need to make an additional pension contribution as part of your contractual agreement.
Employees can also make single contributions to their workplace pension. Don’t forget that all contributions are limited by the employee’s annual allowance. They may face tax charges if total contributions for their benefit are too high.
When will I need to make contributions?
You need to work out your contributions each time you pay your staff. Some providers, including Aviva, can only accept monthly contributions – even if you pay your staff more frequently.
What is salary sacrifice?
Salary sacrifice is an agreement between an employer and an employee. It refers to the sacrifice of an agreed percentage of a salary in return for a benefit – in this case, pension contributions.
How does salary sacrifice work?
Salary sacrifice is taken from an employee’s gross earnings. It can be a more tax efficient way of saving as it effectively reduces take home pay, which in turn can reduce tax and National Insurance contributions. .
Does my existing pension scheme meet the requirements for auto enrolment?
In order to meet the requirements set out for auto enrolment, a pension scheme must satisfy the following criteria:
- It must have a default investment option. This means that all employees’ contributions will be automatically invested without them having to actively choose between pension funds, unless they’d like to choose themselves. This default option must meet quality requirements, including an annual charge no higher than 0.75%
- Contribution levels must meet the minimum levels for auto enrolment.
- All employees who meet the minimum requirements must be auto enrolled into the scheme. The provider (for personal pensions) or provider/trustees (for occupational schemes) must be willing to make the scheme available and any necessary agreements be in place.
The Aviva workplace pension
How long do I have to accept my workplace pension quote?
Once you’ve got your quote, it’s valid for 90 days. If you get your workplace pension quote online, we’ll send you a copy of it by email. You can use this email to retrieve your quote and complete your application later.
Once I accept a quote, how long will it take to get my scheme up and running?
In most cases, if you apply online your scheme will be in full working order on or before your staging date. If your AE duties are already meant to have started, it’s particularly important to get your scheme set up as quickly as possible to avoid harsher penalties.
Is the Aviva workplace pension suitable for partnerships and sole traders?
Yes. You only need to employ one person to be offered terms for our workplace pension scheme. Please remember that sole traders and partners cannot benefit from employer contributions. Only salaried partners in LLPs are an exception to this rule. In any case, business owners can choose whether or not to regard themselves (as individuals) as outside their AE duties.
Can my employees opt out of the pension scheme? What if they don’t want to join it in the first place?
You must auto-enrol all employees who qualify – that is, all those who you assess as eligible jobholders. But if they don’t want to stay on the scheme, they can choose to opt out.
How does opting out work?
Employees have a window of one month from when they join the scheme to opt out. If you set up an Aviva workplace pension, it’ll start from the date that we send your employee(s) the details of their pension.
We run opt-outs on your behalf, and accept them online or over the phone. Once we’ve accepted an opt-out request, contributions are refunded and the employee is treated as if they’d never joined the scheme. This works differently with other providers and pension schemes.
How much will my employer pension charge be for an Aviva workplace pension?
We charge a monthly fee for running your scheme and providing the support, tools and services that help make sure it all goes smoothly. The charge for this is typically between £30 and £50 per month. Find out more about the charges for a workplace pension.
How does the annual management charge (AMC) work?
The AMC is a charge capped at 0.75% per year that’s taken directly from an employee’s pension fund. This can be higher if an employee chooses investment funds outside of the default investment solution, but we’ll clearly state where higher charges are applicable.
What do I get for my employer pension charge?
You can find out more about what you’ll receive for your employer pension charge Click here for more information about your employer pension charge.
Is the Aviva workplace pension scheme compatible with my payroll software?
Our workplace pension scheme is compatible with all types of payroll software. Find out more about how it works with your payroll.
What communications will I need to send out to my workforce and when?
You’ll need to send regulatory communications to your workforce in order for your workplace pension scheme to be compliant.
Your existing payroll software may already have this functionality, so it’s good to check first. If not, we provide a training module after you sign up that’ll help you find the right solution.
What is postponement?
Postponement is when you choose to defer auto enrolment of your staff onto a workplace pension scheme for up to three months for valid business reasons. Find out more about using postponement for auto enrolment.
Do I need to tell Aviva if I’m using postponement?
You don’t need to tell us if you’re using postponement, but you will need to write to the employee(s) who are affected six weeks from when the postponement period starts to let them know. Don’t forget that any jobholder can ask to join the scheme from your staging date, and you must be able to create membership and make contributions if they ask you to.
Late setting up your scheme
I’ve missed my staging date/auto enrolment duties start date. Can I still set up a workplace pension scheme with Aviva?
Yes, you can still set up an Aviva workplace pension scheme if you’ve missed your staging date. Find out how Aviva can help when you’ve missed your staging date.
If I’m late setting up my scheme, do I have to pay backdated contributions?
Yes, you’ll need to pay backdated contributions from the date that you should have staged. In some cases you might not be able to deduct the backdated employee contributions from your workforce, and may need to pay them yourself – so it’s worth setting up a pension scheme as soon as possible if you’re past your staging date to avoid mounting costs.
Can I transfer my existing workplace pension scheme to Aviva?
If you’ve already got a workplace pension scheme in place with another provider and want to transfer to Aviva, you’ll need to contact a financial adviser. They can help you navigate any considerations for your move, like whether your existing provider may charge a penalty fee, any change in scheme or member charges, what investment options are available for your employees, along with any other questions or concerns you might have. Once you’ve agreed that you’re ready, your adviser can obtain a quote on your behalf and start the transfer process for you.
Can my employees transfer their existing pension to an Aviva workplace pension scheme?
If your employees would like to transfer an existing pension to an Aviva workplace pension then they can do so. Depending on the type of scheme they’re transferring their pension plan from, this may affect the benefits they receive when they retire. This could be a complicated decision, so we recommend that they speak to a financial adviser before making any final decisions.
Can my employees move contributions made to their pension pot into another pension scheme?
An employee can transfer part of their pension pot to another pension scheme while they’re receiving employer pension contributions. However, if they transfer the whole value of their pension then their active membership of the scheme will end, and they’d need to speak to you about pension contributions going forward.
If they satisfy the criteria for auto enrolment, they’ll be automatically re-enrolled onto the scheme at your next re-enrolment date, though this can create a gap in contributions of up to four years.
Can my employees transfer out of the Aviva workplace pension scheme?
Yes, your employees can transfer their workplace pension plan to another pension provider without receiving any penalty charges. However, if the value of investments has dropped while your employees have been in the scheme, the transfer value of their pension funds may be less than has been put in.
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.