Workplace pensions are not optional for most UK employers. Auto-enrolment law means you could have duties even if you only employ one person — and the penalties for ignoring them are real. This guide cuts through the jargon and explains what you need to do.
This article is general information, not legal advice. Employment and data rules change, so always check the latest guidance on GOV.UK or speak to a qualified adviser.
What Is Auto-Enrolment?
Auto-enrolment is the system introduced by the Pensions Act 2008 requiring employers to automatically enrol eligible workers into a qualifying workplace pension scheme. Workers can opt out, but you must enrol them first — you cannot ask them whether they want a pension before enrolling them.
The idea is to make saving for retirement the default, rather than something people have to choose to do. Both you and your employee contribute, and the government adds tax relief on top. Everyone benefits from this, which is why the law exists.
Which Workers Must You Enrol?
Workers fall into three categories based on their age and earnings:
Eligible Jobholders — must be enrolled automatically
These are workers aged between 22 and State Pension age who earn above the earnings trigger (check the current threshold on GOV.UK — it is reviewed annually). They must be enrolled on or before their first day that meets both criteria.
Non-Eligible Jobholders — can ask to join
Workers who are aged 16 to 21, or State Pension age to 74, and earn above the lower qualifying earnings threshold, or workers aged 22 to State Pension age who earn below the earnings trigger but above the lower threshold, can ask to be enrolled. If they ask, you must enrol them and pay employer contributions.
Entitled Workers — can join, no employer contributions required
Workers who earn below the lower qualifying earnings threshold can ask to join a pension scheme, but you are not required to contribute. You must still provide access to a scheme.
Always assess each worker individually and keep a record of your assessment.
Minimum Contributions
The minimum contribution levels are set by the government and have been in place at their current levels for several years. At the time of writing, the combined minimum is a percentage of qualifying earnings. Your contribution and your employee's contribution together must reach this minimum. Check the exact percentages currently required on GOV.UK or the Pensions Regulator website — these figures can change and it is important to use the official source.
Qualifying earnings are calculated between a lower and upper threshold — not necessarily the whole salary. Again, check the current bands each tax year.
Auto-enrolment is one of those duties that small employers sometimes discover late. The sooner you get it set up properly, the less stressful it becomes.
Choosing a Pension Scheme
You cannot use just any pension for auto-enrolment — it must be a qualifying scheme. When choosing, consider:
- NEST (National Employment Savings Trust) — set up by the government specifically for auto-enrolment, has no minimum employer size, and must accept any employer who applies
- Other master trusts or group personal pensions — many commercial providers offer qualifying schemes; compare charges and ease of use
- Your payroll software compatibility — check the scheme works with the payroll software you use to save administration time
- Employee communications — some providers offer better online tools for staff to manage their pension
You must not choose a scheme based on which one is least attractive to employees (so they are more likely to opt out). The Pensions Regulator takes a dim view of this.
Your Declaration of Compliance
Once you have enrolled your eligible workers, you must tell the Pensions Regulator you have done so by completing a declaration of compliance (sometimes called a completion letter). This must be done within five months of your staging date or duties start date. Missing this deadline can trigger a fine.
The declaration is completed online via the Pensions Regulator's website. You will need your employer PAYE reference and details of the scheme you have chosen.
Re-Enrolment: Every Three Years
Auto-enrolment is not a one-off task. Every three years you must re-enrol any workers who previously opted out or ceased active membership, provided they still meet the eligibility criteria. This is called cyclical re-enrolment or re-declaration of compliance.
- Your re-enrolment date falls within a six-month window around your third anniversary
- You must assess all workers who opted out and re-enrol those who are still eligible
- You must then submit a re-declaration of compliance to the Pensions Regulator
- Workers can opt out again if they wish — but you must enrol them first
Set a reminder well ahead of your re-enrolment window so it does not catch you out. If your HR foundations are still a work in progress, our guide to statutory sick pay and leave covers another key area of employer obligations.
Auto-Enrolment Checklist
- Find out your duties start date (for new employers, this is the date your first employee starts)
- Assess all workers and categorise them correctly
- Choose a qualifying pension scheme (NEST is a safe default)
- Enrol eligible jobholders on time and write to them within six weeks
- Deduct and pay contributions on time each payroll period
- Complete the declaration of compliance with the Pensions Regulator
- Diarise your re-enrolment date — three years from your staging or duties start date
- Keep records of assessments, enrolments, opt-outs, and contributions
