As an employer, it is up to you to decide what type of pension scheme to offer your employees. Once a scheme is set in place you are also responsible for providing the trustees of your company pension scheme and their advisers with the information that they need to carry out their duties.

The Pensions Regulator is the UK regulator of all work-based pension schemes. Our aim is to provide you with support and guidance to carry out your role with confidence and to work with you if any problems arise.

The Pensions Regulator's main aim is to prevent problems from developing. Where possible, we will provide support and advice to employers, trustees, administrators and others where potential problems are identified. Our role is to make sure that schemes are run properly and that all those involved comply with the law, ultimately helping to rebuild confidence in work-based pensions.

The Pensions Act 2004 gives the Pensions Regulator a set of specific objectives: to protect the benefits of members of work-based pension schemes; to promote good administration of work-based pension schemes; and to reduce the risk of situations arising that may lead to claims for compensation from the Pension Protection Fund.

In order to meet these objectives, we concentrate our resources on schemes where we identify the greatest risk to the security of members' benefits. We will also promote high standards of scheme administration, and work to ensure that those involved in running pension schemes have the necessary skills and knowledge.

‘The Welfare Reform and Pensions Act 1999 requires employers to offer their relevant employees access to at least a stakeholder pension scheme, unless they are exempt'
If you do not yet provide a pension scheme, check the stakeholder section of the Pensions Regulator's website to see if you are legally required to offer one to your employees. The online decision tree will help you decide if you have to offer a stakeholder pension to your staff. The Welfare Reform and Pensions Act 1999 requires employers to offer their relevant employees access to at least a stakeholder pension scheme, unless they are exempt.

A relevant employee can be defined as someone who has worked for you continuously for at least three months, has earned above the National Insurance lower earnings limit (£4,524 per year for 2007/08) continuously over the last three months and is not prevented by an Inland Revenue restriction from contributing to a UK pension scheme; for example if they are a resident overseas. A register of stakeholder schemes can also be found on our website at

Pension responsibilities
In order to identify and reduce the risk to members' benefits, the Pensions Regulator requires a range of information about pension schemes and employers. If you provide a scheme, as an employer, you must:
  • Provide us with any updates to your scheme, for instance a change in membership numbers
  • Ensure that trustees have sufficient information about your company to be able to provide up-to-date, accurate details to the regulator
  • Complete a scheme return. This provides us with a wide range of information about schemes, including details of membership, sponsoring employers, trustees, advisers, administration, funding and investment
  • Pay employees' contributions to the scheme within 19 days from the end of the month in which they were deducted from pay
  • Pay your own contributions in line with the schedule of contributions
  • Advise us of any delays, for example with paying contributions

As an employer, you will need to liaise with trustees in a number of areas. You may also want to take a look at our guidance for trustees as a useful explanation of the trustee role. It is vital for trustees to have access to a basis of pensions knowledge as they must be able to demonstrate that they have the understanding required to carry out their role effectively. If scheme trustees are also your employees, you must give them sufficient paid time off during working hours to carry out their duties as trustees and undertake trustee training. You can find out more about working with trustees in the trustee toolkit.

The trustee toolkit, at, was developed to provide a basic foundation of pensions knowledge, while also preparing for more complex issues such as pension law and scheme funding. It has been particularly developed with trustees of small schemes in mind, as they may not have access to other training.

The toolkit is a free-of-charge, non-compulsory, e-learning package consisting of 11 interactive modules which cover the whole of the guidance in the codes. The programme uses scheme scenarios and case studies to guide the user through the modules, with each one ending in a small assessment. Although designed for trustees, it can be completed by anyone who wishes to use it to improve their knowledge and gain an insight into the day-to-day running of a pension scheme.

The Pensions Regulator's approach is to educate, enable and enforce, with the emphasis on education and enablement. To help educate trustees and others involved in the running of workplace-based pensions, so that they are better able to run their schemes well, we issue good practice guidance, codes of practice and the trustee toolkit. Enforcement is always seen as a last resort.

Enforcing the law
The Pensions Acts 1995 and 2004 provide the Pensions Regulator with a range of powers that enable us to meet our objectives. We will use these powers flexibly, reasonably and appropriately, with the aim of putting things right and keeping schemes on the right track for the long term.

Our powers fall into three broad categories:
  • Investigating schemes: how we gather information to help us identify and monitor risks
  • Putting things right: what we can do where problems have been identified
  • Acting against avoidance: how we will ensure that employers do not sidestep their pension obligations

The Pensions Regulator's codes of practice and guidance give practical guidelines on the requirements of pensions legislation. The codes set out the standards of conduct and practice expected of those involved in running and providing pension schemes. Those standards reflect how a well run pension scheme would choose to meet the relevant requirements.

‘Shopping around for an annuity can often produce a higher pension income and, generally, the decision to purchase an annuity is irreversible'
Although the Pensions Regulator regulates defined benefit (DB) and defined contribution (DC) schemes, small employers are more likely to have DC schemes. One of the Pensions Regulator's aims is to protect members' benefits in DC schemes and to promote and improve understanding of good administration. We are currently working on guidance materials to help trustees, employers and also their advisers and others with responsibility for running DC schemes.

The Pensions Regulator works to ensure that pension schemes are well run to provide the best protection to members' benefits. We have identified five main risks to members of DC schemes: member understanding; administrative practices; investment practices; charges; and decisions on retirement choices.

As part of its ongoing commitment to DC schemes, the Pensions Regulator has recently published a series of questions and answers on DC schemes and in coming months also plans to issue: guidance on communicating with members; good practice examples and case studies; DC scheme returns analysis; and investment practices guidance. The guidance documents are produced to give trustees and employers the information they need and the confidence to fulfil their duties.

The Pensions Regulator has also recently published guidance on retirement options that sets out good practice in this area, and encourages trustees and employers of DC schemes to follow good practice that is likely to lead to informed decisions being taken and emphasise to members the advantages of obtaining financial advice.

The retirement options guidance deals with the open market option in occupational DC schemes or those schemes with a DC element, for example additional voluntary contributions to DB schemes. This is where, instead of the scheme's process, they use their fund to buy an annuity from an insurance company of their choice. Shopping around for an annuity can often produce a higher pension income and, generally, the decision to purchase an annuity is irreversible, so it is important that members are able to make an informed choice. Trustees must ensure that members are aware of their right to exercise the open market option as they have a legal obligation to do this.

Chris Dobson is a strategic development executive director at The Pensions Regulator