Group personal pension – information for payroll professionals

Moving a workplace pension scheme from one provider to another in the UK is a structured process that involves co-ordination between the employer, the current pension provider, and the new provider. Here’s a step-by-step overview of how it typically works: 

1.    Review your client's current scheme

• Understand the terms, fees and any exit charges
• Check if there are any employer-specific benefits or valuable protections, features or guarantees that transferring employees could lose

2.     Define your objectives

• Are you looking for lower fees, better investment options, improved service, or digital tools for your client?
• Decide whether you want to replace the scheme entirely or run both schemes in parallel for a time

3.     Choose a new provider

• Compare pension providers based on:
  • Charges
  • Investment options and performance
  • Employee tools and support
  • Compliance with auto enrolment rules
  • Retirement benefit options

4.     Consult employees

• While not usually legally required, it’s good practice to tell employees about the change and consult with them
• Give employees clear communications on how the transfer affects them

5.     Set up the new scheme

• Work with the new provider to:
  • Set up the scheme
  • Integrate with payroll
  • Make sure it meets auto enrolment requirements

6.     Tell the old provider

• Your client should tell their current provider of their intention to stop contributions and transfer the scheme
• Ask for a bulk transfer if moving existing funds

7.     Transfer contributions

• You can either:
  • Stop contributions to the old scheme and start afresh with the new one, or
  • Arrange a bulk transfer of existing employee funds (requires consent and regulatory compliance)

8.     Communicate with employees

• Give employees details of the new scheme
• Provide them with information about transferring old pensions (if applicable)
• Offer support for questions or concerns

9.     Update payroll and records

• Make sure you align payroll with the new scheme
• Keep records of the transition for compliance and audit purposes

10.     Monitor and review

• Regularly review the new scheme’s performance and employee satisfaction

When employees join or leave a workplace pension scheme in the UK, employers have specific legal duties to follow. We outline them below.

When an employee joins the pension scheme

1.     Automatic enrolment

If the employee is aged 22 to state pension age, earning over £10,000 a year and working in the UK, you must:

• automatically enrol them into your workplace pension scheme
• tell them in writing within six weeks, including information about:
  • The scheme name and provider
  • Contribution amounts for both employer and employee
  • How tax relief works
  • How to opt out if they choose

2.     If they ask to join

If an employee doesn’t meet the auto enrolment criteria but asks to join the scheme, you must:

• Enrol them if they’re aged 16 to 74
• If they earn at least £520 a month you must start making contributions
• Provide them with written confirmation of this

When an employee leaves the pension scheme

• If they opt out within one month of enrolment
  • The employee must ask the pension provider for an opt-out form
  • You must stop deductions from salary
  • You must refund all contributions (both employer and employee)
• If they opt out after one month of enrolment
  • Contributions remain in their pension pot
  • They can stop contributing but fund stay invested
  • They can’t withdraw their contributions until they retire
• If they leave the company
  • You must stop contributions from the final payroll
  • You must tell the pension provider of the employee’s departure
  • The pension pot remains with the provider unless the employee transfers it

Ongoing employer duties

You must keep accurate records of these things:

• Enrolments and opt-outs
• Contributions
• Communications with employees
• Re-enrolment of eligible employees every three years
• Submitting your Declaration of Compliance to The Pensions Regulator

Yes, you can manage a workplace pension through payroll software. In fact, this is a common and efficient way for employers to handle pension contributions and compliance with auto enrolment duties.

What payroll software can do for pensions

1.      Auto enrolment compliance

• Automatically assess employee eligibility
• Enrol eligible employees into the pension scheme
• Generate and send statutory communications
  

2.       Calculate contributions

• Calculate employee and employer contributions based on qualifying earnings
• Apply salary sacrifice arrangements if used
  

3.      Submit data

• Submit contribution data directly to pension providers (for example, through APIs or CSV uploads)
• Integrate with providers like Nest, The People’s Pension, Aviva, and others
  

4.      Reporting and auditing

• Generate reports for compliance and auditing
• Track opt-ins, opt-outs, and re-enrolment dates
  

5.      Payslip integration

• Show pension deductions and employer contributions on employee payslips