Ready...Steady...Auto Enrol!

There is no doubt that you have already seen the adverts, the billboards, and heard the “we’re all in” catchphrase countless times by now. However, despite all this, are you ready for auto enrolment?

This article aims to explain what auto enrolment is, how it may affect you and the processes involved.

Auto enrolment is probably the largest change to employers for years – even larger than RTI! Every employer with at least one member of staff now has new duties to comply with. They must place those who meet certain criteria into a workplace pension scheme and contribute into it too.

The employer must automatically enrol workers into a workplace pension scheme if they:

  • Work in the UK
  • Are not already in a pension scheme
  • Earn more than £10,000 per year
  • Are aged between 22 and State Pension Age (“SPA”)

However, there are other workers who have the right to join a pension scheme:


Director Only PAYE Schemes

The business will generally be exempt if the people working for you are:

  • you as the sole director;
  • a number of directors, none of whom has an employment contract; or
  • a number of directors, only one of whom has an employment contract.

Automatic enrolment will apply if more than one director has an employment contract. Consequently, the company will have auto-enrolment duties to those directors who have the employment contracts.

If the exemption applies to you, you must still inform The Pension Regulator that your company is exempt.

When Will This Affect Me?

Every employer is given a staging date. If you do not know yours yet, click here to enter your PAYE reference number on The Pension Regulators website.

What Do I Need to Do?

The first step is to know your staging date.

You should then provide a contact for auto enrolment between 9 and 12 months before your staging date. Once decided, you should then inform The Pension Regulator so you do not miss out on any important communications.

You will also need to choose a pension provider. Please note that we cannot offer any recommendations regarding this as we are not able to provide financial advice. However, we can put you in contact with someone who can. Please do not hesitate to contact us if you would like any further information.

You will need to review your workforce and decide who is eligible to enrol. However, it may be that your pension and/or payroll provider can assist you with this part of the process.

Please remember, the sooner you start to look for a pension provider the better. If you start searching as soon as you know your staging date, then you may find a number of choices more suitable for your needs.

Can Employees Opt Out?

Employees cannot opt out of a pension scheme before they are opted in automatically.

Once staff have been enrolled into the pension scheme, they then have a calendar month where they can decide they wish to opt out and receive a full refund of contributions.

It must be stressed that if it is seen that an employer encourages or pressurises their employees to opt out of the pension scheme, they are very steep fines involved!

What Costs Will Be Involved?

Date Employer Minimum Contribution Total Minimum Contribution
Before 30/09/2017 1% 2%
01/10/2017 – 30/09/2018 2% 5%
01/10/2018 onwards 3% 8%

There will be some admin costs that will also be incurred. Before your staging date, you will need to assess your staff and ensure they are enrolled into the pension scheme, if they are eligible, by the staging date.

After staging, every pay date, your employees will need to be reassessed to determine whether any new joiners are eligible or want to join the scheme or whether any existing non-enrolled employees should now be enrolled.

Auto enrolment can be seen as a daunting prospect but if you tackle the situation now, you will be in a much more comfortable situation when it becomes time for your business to stage.

We have a number of people at Arnold Hill who are familiar with auto enrolment. We must stress that we cannot provide any financial advice but if you have any queries in respect of its practical operation, please do not hesitate to contact us and we will to assist you the best we can.

The information in this article is believed to be factually correct at the time of writing and publication, but is not intended to constitute advice.  No liability is accepted for any loss howsoever arising as a result of the contents of this article. Specific advice should be sought before entering into, or refraining from entering into any transaction.