All large employers are now required to enrol their employees in a quality workplace pension scheme. This so-called auto-enrolment is gradually being extended to smaller businesses. Those employing fewer than 30 people will have to auto-enrol their employees from June 2015 onwards. As an individual employee you can opt out of joining if you wish, but you should consider what you may be giving up.

If you join a workplace pension scheme, you can contribute from your salary and get tax relief. However, your salary is subject to NIC (at 12% and 2% above £42,475), and that doesn’t get reduced by pension contributions that you pay.

It makes a lot of sense for your employer to pay directly into a pension fund on your behalf to avoid the NIC. You could agree to reduce your basic pay rate and increase employer contributions instead. This is known as a salary sacrifice. This must be done properly to make sure that HMRC can’t argue there was ‘really’ a payment to you anyway – it’s worth taking advice if you are going to substitute employer pension contributions for pay.