BUSINESS DEVELOPMENT 30 images JANUARY 2023 I need to set up a pension scheme for my employees, but I’m not sure where to start. A pension is the best way to save for the future, but for some employees this can feel all too distant when compared to current pressing needs. Thank goodness all employers have an obligation to enrol their eligible workers into a pension scheme and make contributions to it! This is an essential part of safeguarding your employees’ wellbeing. And, it’s a legal duty – not complying can lead to hefty fines. When do you need to set up a pension scheme? Your pension duties start as soon as you bring in your first employee, so it’s important to be prepared. You can postpone your duties for up to three months if you need more breathing space, but you need to notify the employee(s) within six weeks of their start date that this is happening. You also need to make sure you tell The Pensions Regulator that you’ve completed your obligations. What does setting up a pension scheme involve? Setting up your pension scheme will start with making some key decisions about how you want your scheme to be arranged. For example, do you want to operate a relief at source scheme, where pension contributions are taken after tax, or a net pay arrangement, where pension contributions are taken before tax? You can also set up a salary sacrifice arrangement, although this needs some additional administration. You will then need to select a pension provider. There are a number of established providers, ranging from the large master trusts to newer digital offerings. Make sure you check the fees charged to you and your employees, as well as taking into consideration software integrations, digital engagement and other additional services. Who needs to be enrolled in the pension scheme? Automatic enrolment applies to all workers aged between 22 and State Pension age (dependent on date of birth) who earn at least £10,000 per year. You need to assess each person who joins the company to decide whether they are eligible (although your pension provider or payroll software should be able to support with this). Those who are not eligible are able to opt in if they want to take part in the scheme. You will need to communicate with each employee about their assessment and enrolment, and let them know their options. Employees can also opt out of the scheme, but you will need to re-assess and re-enrol them every three years. Don’t forget to re-assess employees as their situation changes, for example they reach age 22. What does the employer need to contribute? It’s a legal duty to contribute at least 3% of an employee’s qualifying earnings (currently £6,240–£50,270), with the total amount (with the employee’s contribution included) reaching at least 8%. However, it’s important to note that this default minimum isn’t enough to give most people a comfortable retirement. Increasing your employer contribution can not only boost your employees’ future financial wellbeing, but also make your company more competitive when it comes to recruitment and retention. For example, you could offer a matching scheme, where you’ll increase your contribution up to a certain point if an employee also increases theirs. Adding value to your employees The pension scheme is, for most companies, the most valuable benefit you’ll ever offer your employees. Increasing contributions isn’t the only way to make the most of it. Switching to a salary sacrifice arrangement can unlock cost savings for your business and your employees. And engaging your employees with their pension savings can help them appreciate the enormous value they’re getting from the scheme – and from you. Not to mention, further financial wellbeing support can help them juggle the demands of day-to-day life at the same time as saving for tomorrow. Expert advice on the business of running a garment decoration company Q&A Sahil Sethi is chief executive of Maji, the digital financial wellbeing and money management platform that supports businesses of all sizes in engaging their employees with their pensions, running a successful salary sacrifice scheme, and boosting financial wellbeing.