Is It Illegal for an Employer Not to Pay a Pension?

Employers must pay workplace pensions under UK law. Find out what happens if an employer doesn’t pay pension contributions and how to report it.

In the UK, workplace pensions are a legal requirement for most employers. Since the introduction of auto-enrolment in 2012, employers must provide a workplace pension scheme and make contributions on behalf of eligible employees.

If an employer fails to pay pension contributions or does not enrol employees into a pension scheme when they should, they are breaking the law and could face serious penalties. This guide explains when employers must pay pension contributions, what happens if they don’t, and what employees can do to report issues.

Is an Employer Legally Required to Pay Pension Contributions?

Under the Pensions Act 2008, UK employers must:

  • Enrol all eligible employees into a workplace pension scheme (auto-enrolment).

  • Pay at least 3% of qualifying earnings into employees’ pensions.

  • Deduct and contribute employee pension contributions correctly.

  • Ensure the pension scheme meets legal requirements set by The Pensions Regulator (TPR).

Employers must not refuse to enrol eligible staff, delay contributions, or avoid their pension responsibilities. Doing so is illegal and can lead to financial penalties and legal action.

When Must an Employer Pay a Workplace Pension?

An employer must provide a workplace pension scheme if an employee:

  • Is aged between 22 and State Pension age.

  • Earns more than £10,000 per year.

  • Works in the UK.

Employees who do not meet these criteria may still opt into a pension scheme, and employers must contribute if the employee earns over £6,240 per year.

What Happens If an Employer Doesn’t Pay Pension Contributions?

If an employer fails to pay pension contributions, they are breaking the law. The Pensions Regulator (TPR) has the power to investigate and take action, including:

  1. Fines and Penalties

    • Employers can be fined £400 for missing pension contributions.

    • Daily fines range from £50 to £10,000, depending on company size.

  2. Legal Action

    • The Pensions Regulator can take court action against employers who repeatedly fail to comply.

  3. Payment Recovery

    • Employers must backdate missing pension contributions if they fail to pay on time.

  4. Banning Orders

    • In severe cases, company directors may be disqualified from running a business.

What Can Employees Do If Their Employer Isn’t Paying Their Pension?

If you suspect your employer is not paying into your pension, you should:

  1. Check Your Payslip and Pension Statements

    • Ensure pension deductions are listed on your payslip.

    • Log into your pension provider’s website to check employer contributions.

  2. Speak to Your Employer

    • Ask HR or payroll why contributions are missing or delayed.

    • Request a breakdown of your pension payments.

  3. Report to The Pensions Regulator (TPR)

    • If your employer refuses to pay, report them to TPR at www.thepensionsregulator.gov.uk.

    • The Pensions Regulator will investigate and can take action against non-compliant employers.

  4. Contact ACAS for Advice

    • The Advisory, Conciliation and Arbitration Service (ACAS) provides free advice on employer disputes.

  5. Seek Legal Action

    • If your employer repeatedly fails to comply, you may take legal action through an employment tribunal.

Can an Employer Stop Paying a Workplace Pension?

Employers cannot stop making pension contributions unless:

  • The employee opts out of the workplace pension scheme.

  • The employee leaves the company.

  • The employer closes the business (in which case pensions are protected under legal regulations).

If an employer stops paying without a valid reason, they are breaking pension laws and could face legal action.

Final Thoughts

It is illegal for an employer not to pay pension contributions if they are legally required to do so under auto-enrolment laws. If an employer fails to pay, they can face fines, legal action, and bans from running a business.

Employees should regularly check their pension statements, speak to their employer about any missing payments, and report concerns to The Pensions Regulator if necessary.

If you suspect your employer is not complying with pension laws, taking early action can help ensure you receive the pension contributions you are entitled to.