Since February 2018, all employers must provide a pension scheme for their employee’s, even if a company only has one employee.
This also applies to kickstart employees who are on 6-month employment contracts.
Pension Providers and Contribution Rates
If the Kickstart employee is your first employee, then you will need to register with an auto enrolment pension provider. Providers include NEST and the People’s Pension, more options can be found here.
When you run your payroll each month your accountancy software / Accountant will tell you how much you need to pay into the employee’s pension account. This amount will consist of employee’s and employer’s contributions.
The current auto enrolment pension contribution rates are:
| Employer contribution | Employee Contribution | Total Contribution. |
| 3 % | 5% | 8% |
Eligibility and Age
Employees aged 22 and over are eligible to be auto enrolled into a pension scheme. Employees under 22 can request that they are auto enrolled and if they do, you need to enrol them.
Eligibility and Earnings
If your kickstart employee is aged 22 and over, they will earn more then the £10,000 threshold needed for being opted into an auto enrolment pension scheme, and you should automatically enrol them.
Pension Joining date for new starters
New employees can either be opted into your pension scheme from day one of their employment, or, you can defer their joining date for 3 months (12 weeks from their start date). This is your decision as an employer. If the kickstart employee is your first employee, then you may wish to defer their pension start date for 3 months so that you have time to set up a pension provider once the kickstart employee has started.
Employee’s ability to opt out
You can ask an employee if they wish to be opted out of the pension scheme, however you should not put any pressure on the employee to opt out. If the employee wishes to be opted out then you should ask them to confirm this to you in writing (an email is fine), you should keep a record of this. If the employee does nothing then you need to opt them in hence “auto enrolment”.
What happens when you have enrolled an employee into a pension scheme?
Your must write to your employees (by email is fine). You need to let them know.
· the date you added them to the pension scheme.
· the type of pension scheme and who runs it
· how much they’ll contribute and how much you’ll also pay in
(percentages as above)
· how to leave the scheme if they want to
· how tax relief applies to them (you can use the below example)
| Employee puts in £40 | Employer pays in £30 | Employee gets £10 tax relief | A total of £80 goes into the employee’s pension. |
If you have any questions regarding auto enrolment pensions or are interested in finding out more information regarding employing a fully funded Kickstart employee for 6 months. Please get in touch.
Harwood HR – HR Consultancy providing Outsourced HR Services. We provide clear, cost effective HR advice. For a free consultation, please contact us on:
0117 439 0119 or info@harwood-hr.co.uk
