Employer-sponsored pension schemes
Providing access to an employer-sponsored pension scheme and the types of schemes available.
Employer contributions to a pension scheme registered with HM Revenue & Customs (HMRC) attract . This makes them a tax-efficient way of increasing employee benefits and remuneration - and provides a good incentive for employees to join the pension scheme.
Automatic enrolment
All employers must provide workers with a qualifying workplace pension. This process is called automatic enrolment.
Under automatic enrolment, the government has set a minimum percentage of qualifying earnings that has to be contributed by the employer. This is currently set at 3%. Qualifying earnings are currently earnings over 拢6,240 up to a maximum of 拢50,270 for the 2025-26 financial year.
Read more on automatic enrolment into a workplace pension.
Types of workplace pension schemes
There are several types of employer-sponsored pension schemes:
Defined benefit (salary-related) schemes
The pension payable depends on the employee's salary and the number of years of pensionable service. You must ensure that the scheme has sufficient funds to meet its obligations. If it does not, you will be required to make up any deficit.
Defined contribution (money-purchase) schemes
The pension payable depends mainly on the value of the employee's pension savings at retirement. Employers who contribute to these schemes typically contribute around 6% of basic salary. At retirement, the value of the savings depends on how much is paid in and how well it has been invested. Employees bear the risk of underperformance.
Hybrid schemes
The size of the pension depends on the combination of salary-related and money-purchase benefits. For example, employees might belong to a money-purchase scheme for the first few years, and transfer to a salary-related scheme once they have completed a certain number of years or reached a certain age ('nursery' schemes). Alternatively, they might be entitled to a final salary up to a certain level, with anything thereafter coming on a money-purchase basis. There are other possible combinations.
Defined contribution workplace pensions
There are four main types of defined-contribution workplace pensions:
- defined contribution occupational pension schemes - contributions from the employer and employees are held in trust, with the trustees responsible for managing the scheme funds
- group personal and stakeholder pension schemes - employers arrange access to personal pensions managed by a third party
- small self-administered pension schemes - normally schemes with fewer than 12 members and where all the members are trustees
- executive pension plans - designed specifically for directors, executives, and people who own their own business
Pensions guidance
Read more on how to choose the right pension scheme.
provides further information on the different pension schemes.
HM Revenue & Customs (HMRC) offers a service - a secure method for businesses to register and administer their pension schemes and complete a number of forms and returns online. Some pension forms and returns must be filed online.
It is a legal requirement for all work-based pension schemes that are registered with HMRC and have more than one member to also register with The Pensions Regulator. .