How to set up a workplace pension

As a business owner, you have a duty to set up a workplace pension scheme for your employees. But if it’s not your normal line of business, the prospect of doing that can be both confusing and overwhelming. 

We’re here to help you set up your workplace pension in as few as eight steps. We’ll walk you though the process, explaining what you need to do and when. From setting up your scheme to outlining your duties as an employer, we’ll help you understand what you need to do, step by step.

When? As soon as possible.

If you’re a new employer, your workplace pension scheme must start on the same date as your first employment contract. This is known as your duties start date. You must have your scheme set up by this date and assessed your workforce to see who you need to enrol into it. 

You and anyone helping you set up and run your workplace pension scheme must understand your auto-enrolment duties before you start. 

As soon as you know you’re going to have auto-enrolment duties, you can nominate a contact with The Pensions Regulator. That person will get useful emails to help keep you on track and make sure you meet your duties on time. 

When? Ideally, two months before your duties start.

You’ll need to think about these three things:

• Choosing a pension provider 
  This is an important decision. You need to weigh up the types of pensions, the costs and how much help the provider will give you. The more support you need, the more expensive it’s likely to be, but that extra help could be worth it’s weight in gold.
  Each pension provider will offer different investment options, different levels of support and different charges, so it’s important to do your research and choose the right provider for you. You should get quotes from the providers you’re considering. Once you’ve chosen a provider, you’ll need to apply to set up your scheme with them. The provider should take you through the necessary steps to do this.
• Choosing payroll software
  When you choose your payroll software, think about what you want it to do for you. To comply with auto-enrolment legislation, it needs to be able to assess your workforce, calculate contributions, send communications to your employees, and keep records. Having software with the functionality to complete all of these tasks will save you a lot of time in the long run.
  
• How much you’ll contribute to your employees’ pensions
  This is another important consideration. The governments sets a minimum employer contribution of 3%, but you can choose to contribute more. You’ll need to look at your balance sheet to make sure you can afford your proposed contributions. You can read more about this in Step 4.

When? In time for your duties start date.

To meet your auto-enrolment duties, you need to assess your workforce, so you know who’s eligible for your workplace pension scheme. 

To do this, you’ll need to look these two factors:

• How much each member of staff earns
• How old they are.

The table below shows the three different categories your employees might fall into, and what your responsibilities are for each. The information shown is for the 2025/2026 tax year. 

You can put off assessing some or all of your workforce for up to three months. This is known as postponement. 

Your duties start date doesn’t change if you use postponement. It simply means you’re doing their assessment a little later. 

You might choose to use postponement if:

• you have staff on temporary contracts
• you employ short-term, zero-hour, or other staff who aren’t on regular hours or incomes – you’ll still have to assess them each time you pay them
• you have staff whose earning fluctuate
• your new starters have to pass a probationary period – this must be no longer than three months
• you’d like to avoid having to calculate and pay pension contributions for part of a pay period.

If you choose postponement, you’ll need to let your staff know and tell them how it will affect them.

When? On your duties start date – or up to three months later if you’re using postponement.

You will need to auto-enrol any employees you assess as eligible jobholders into your workplace pension scheme. 

With some workplace pension providers, all you have to do is upload a file using their online scheme management system. They'll then enrol those employees into your pension scheme and send them a welcome pack. 

You don’t have to auto-enrol any employees assessed as non-eligible jobholders or entitled workers. However, they can ask to join your scheme. You’ll need to write to them to explain this within six weeks of your duties start date – we cover this in step 5. 

Work out what your contributions will be

You’ll need to work out what pension contributions both you and your employees need to make, and send this information to your provider.

With some providers, you can do this using their online scheme management system. Choosing payroll software that calculates the correct contribution amounts can also make this task easier for you to complete.  

The table shows the current level of minimum contributions set by the government:

You can choose to pay higher pension contribution levels, but you can’t pay less. The figures above apply to a Relief at Source scheme – like a group personal pension scheme. The calculation works differently for other types of pension scheme. 

Pension contributions are based on qualifying earnings, which usually include:

• basic pay
• overtime
• bonuses
• commission
• statutory sick pay
• statutory maternity, paternity or adoption pay.

Within this, there’s a minimum and maximum level of earnings seen as qualifying earnings. In the 2025/2026 tax year, qualifying earnings start at £6,240 and end at £50,270. 

We explain more about this on our page about calculating pension contributions.

When? Within six weeks from your duties start date.

After assessing which of your staff are eligible for the scheme, you’re required by law to  write to each of them individually – by letter or email – to explain how auto-enrolment will affect them. You also need to tell them how your workplace pension scheme works.

Depending on your provider, you may need to do this before you let them know the details of employees who will be joining the scheme. This is important because it affects the date on which employees can choose to opt out. 

Your payroll provider might offer software that can produce this communication for you. Some providers also offer tools and templates to help you communicate with your employees about their workplace pension. This kind of support could be invaluable, making it both quicker and easier for you to communicate with your employees. 

When?  Within five months of your duties start date.

You have to complete a declaration of compliance form no later than five months after your duties start date. This lets the regulator know how you’ve met your legal duties. You could be fined if you don’t complete the declaration on time or if the information you give is incorrect. If you use postponement, you can’t complete your declaration of compliance until after the postponement period finishes. 

You can get the form from The Pension Regulators website, where you can also see a checklist of all the information you need and where to find it.

When? Every time you pay your staff.

Once your auto-enrolment duties start, they don’t stop. In fact, you need to repeat steps 3 to 6 for as long as you continue to employ people. Here’s an outline of what you’ll need to do:

• Assess your staff every pay period
  Every time you pay an employee who you haven’t had to auto-enrol before (new hires or existing staff), you’ll need to assess them as you did on your duties start date. If any employees become eligible jobholders, you must either auto-enrol them into your scheme or use postponement to delay assessment.
• Attend to employees who opt out of your scheme
  Any member of staff auto-enrolled into your workplace pension scheme can choose to leave it within one month of being enrolled. This is known as opting out. If this happens, you have one month from their request to:
  • remove them from your scheme
  • stop taking contributions from their pay
  • arrange a full refund of what they’ve paid to date.

If they ask to leave the scheme more than one month after auto-enrolment, any pensions already made will stay in the pension plan.

• Make regular pension contributions
  Every time you pay your staff, you’ll need to make contributions into eligible scheme members’ pensions. This includes any contributions you’ve agreed to make for entitled workers or any other employees covered by contractual joining. In most cases, of course, your employees themselves will also have to contribute.
• Keep accurate records
  You’ll need to keep records of how you’ve met your legal duties, including:
  • the names and addresses of the members you’ve enrolled into your workplace pension scheme
  • when money was paid into the scheme
  • any requests to join or leave your scheme
  • your pension scheme reference number.
  • The law requires you to record this information and keep the records for six years. You need only keep requests to leave the pension scheme for four years.  
• Ongoing responsibilities
  You must monitor contributions to make sure you’re calculating them correctly and paying them into the pension scheme on time. You also need to make sure you have a system in place to answer any questions your employees may have about their workplace pension scheme. Your pension provider may be able to help you, giving you support and tools to keep your scheme running smoothly and efficiently.

When? Ongoing.

As well as the regular tasks you’ll need to perform, you need to re-enrol opted-out members of staff every three years. You may also need to re-certify your compliance every 18 months. 

Automatic re-enrolment every three years

Every three years, you’ll need to repeat some of the actions you performed on your duties start date. This is because you have to put previously opted-out eligible jobholders back onto your scheme – even though they are free to opt out again. 

This is known as automatic re-enrolment. Your re-enrolment date is normally your duties start date plus three years. If you prefer, you can choose a date three months either side of this anniversary. Once your chosen re-enrolment date arrives, you’ll need to reassess all of your affected employees and re-enrol the eligible jobholders within six weeks.

Re-certify at least every 18 months

If you’re calculating your pension contributions based on something other than qualifying earnings, you’ll need to complete a certificate at least every 18 months. This is the tell The Pensions Regulator that you’re paying at least the minimum contribution levels required by law.