An employer must choose a compliant pension scheme. Pension companies will offer various schemes and the government has set up 'NEST' a compliant scheme that must accept all applications. Pension companies will generally charge a management fee (which should be capped at 0.75% of fund value) and an administration fee, which has to be advised before engagement. Employers should also expect to pay scheme set-up charges.
Employer & Employee Contributions Both employee and employer contributions are payable as a percentage of the qualifying earnings of the eligible jobholder. Qualifying earnings are currently between £5,772 and £41,865 (for 2014/15)
Minimum Contributions These are set out in the table below:
|DATE||Employer Minimum||Employee Minimum||TOTAL|
|1/10/17 to 30/9/18||2%||3%||5%|
Employers can set contributions higher if they wish, but the Pensions Regulator can investigate if they believe that employee contributions are set too high in order to put off employees opting in.
Investment Advice Employers should not advise employees on how to invest sums in their pension fund. The pension scheme will have a default fund into which funds are placed and will offer alternative funds as appropriate.