DH has been an idiot re pension

[sillybillydh]

My DH is 55 and is usually great with money.
For most of his career he's been a contractor, with a few short spells working for large corporations. He's got a private pension and a smallish occupational pension. We're mortgage free and have a very healthy amount of savings, the lions share coming from him (though is shared between us)
He's been working for a teeny tiny firm for the last three-ish years. I doesn't pay particularly well (under 50k) but it's low stress and permanent WFH with lots of flexibility.

I asked him a few months ago about the pension with the job. He didn't know. Erm, what? Turns out he'd never seen a payslip. I was gobsmacked. He said his salary went into his account every month so he didn't really sorry about it.
I told him his employer legally had to sign him up to the workplace pension scheme. Initially he said that he didn't want to "rock the boat". He was really pleased when landed this job as his skills are pretty niche and becoming obsolete. I said don't be ridiculous, you're an employee on PAYE, you have rights.
He's finally chased it up, turns out his employer has NOT been paying in but has told DH he's just set it up. So now he's in the process of trying to make sure his employer backdates the payments, DH also needs to pay in. It's just such a mess.
It's a one man show basically so no HR.
I just can't get my head around how my normally so financially sensible DH has ended up on this situation. I'm also worried, only because DH has planted the seed, that he's going to get sacked. Which is ridiculous.
Please tell me this will be ok?!

This is incorrect.
The minimum is 8% of which at least 3% must come from the employer. If they have no scheme in place, they will struggle to argue they only owe 3% as the minimum is 8%. In the absence of a plan, they will struggle to argue OPDH must settle the remaining 5%.
This is a massive compliance breach with serious implications for the ER. And those saying he’d risk being fired - this is a sure fire way for the employer to dig themselves an even deeper hole.

I really don't think this qualifies as being an idiot.

He's not going to get fired, if anyone's getting fired it's the accountant because they always get blamed in things like this.

I say it with love of course, but he has been a bit of an idiot considering he's usually so financially savvy.

A close acquaintance of mine saw “payslips” showing tax and NI had been paid, but upon looking at their HMRC tax record, there was nothing. Zilch. It took a looooong time to be sorted. Needless to say they no longer work there.

Incorrect. Pensions can be deducted in two ways. Large companies tend to do salary sacrifice where they come out first and then you're taxed on your income after this so tax benefits at source. Smaller companies don't tend to do this. Here your pension would normally come out after tax and the pension provider adds 20% on to the pension. If you're a higher rate tax payer you need to then do a tax return. I'm the former (large company) and DH is the latter (small company). He's crap at finance so I've always had to check things like this. His small employer did something similar when he started 2 years ago and I pretty much wrote all the emails that he sent his employer to remedy the situation.

His tax and NI are fine, he's checked his records.

Aside from potential fines I cannot follow your logic. The employer does not have to put in more than 3%. End of. 1% is tax relief and 4% has to be contributed by the employee. Just because the employer has not been compliant, doesn’t mean the employee doesn’t need to put in their part.

You also don’t get carry forward unless you max out the current year but it is irrelevant for the amounts you are talking about anyway.

Why would that mean they would let him go? Any future employee would ask the same.

At my company we have to opt in and the company % is only if I contribute the same. Is he certain he wasn't told about it when he started and just didn't do anything?

On a £50k salary total combination contribution of employer and employee is 8% equals £4K per year, so over 3 years £12k. So that is a problem.

A good finance person, who knows payroll will be able to get this sorted easily. I've done it twice, when I started accounts jobs and realised a person had been missed off the pension.

Costly mistake for the employer!

@sillybillydh is he even sure the company has paid both employer’s and employee’s NI as well as passed on to HMRC the tax payments deducted? My friend was given a payslip showing all the deductions but the company kept the money deducted!

The minimum contribution is 8% under AE regs. Of that, at least 3% must come from the ER, the balance can come from the EE when there’s a scheme in place with plan rules. The contribution structure should be clearly communicated to the participant along with details on how to opt out if they wish. None of this was adhered to because there’s no scheme.

In the absence of a scheme, how do they define what the ER/EE contribution rate was to identify who owes the other 5%?

Pensions are a legally prescribed benefit, in the event of non-compliance it would be difficult for the ER to make retrospective plan rules up and bill the EE, because again they failed to comply by not communicating these rules within the prescribed timings.

ER contribution isn’t topped up by tax, just the EE because, the employer doesn’t pay tax. The 3% you mentioned would go in as an ER contribution, not EE. But should be 8%.

Re AA & carry forward, that’s a minor detail because none of it is hugely relevant if contributions are below the threshold anyway. Where above, ofc carry forward is available.

Are you in England? Autoenrolment isn't an opt in law and minimum contributions are compulsory. That can't be what happened here

Agree. Must be an entitled worker or non-eligible job holder, due to age or income.

Not necessarily, OP says it is a small employer so it's very unlikely that salary sacrifice would have been used for.pension payments.

A Union is unlikely to agree to represent as he has not been in a union and the case is pre joining. You join and pay subs in case you have a problem. ACAS give good free advice.